Energy Companies Allegedly Misuseing Direct Debit Scheme

Ken68

Signatures and avatars can be edited out, makes for a faster read. At least it does on Dial Up.

DirectDebacle

space_rider wrote: »

I prefer to pay my bills by DD as it helps me to budget but as a consumer I certainly would not want to be paying more than I actually need to.

Exactly. That is the consumer in you speaking. You have rightly declared yourself as employed by the energy industry but this side of you fails to address concerns expresed on here.

Why not? They all penalise you for not doing Direct Debit, and I am not prepared to let them do an open Direct Debit for a quarterly bill, given that your bank balance then becomes vulnerable to any mistake in the bill.

Incisor has hit the nail on the head more than once and his points have not been answered by any of the employees that post on here.

Correct me if I am wrong.
A DD scheme is to even out energy bills over the course of a year. Apart from price/consumption adjustments payments will remain the same over the 12 months. Customer has advantage of being able to plan outgoings and supplier has the advantage of a predictable cash flow.

Quarterly bills are paid in arrears. This restricts cash flow and can lead to unmanageable bills for some customers.

For some customers DD seems good but it requires trust. The supplier has been given the privelige of access to a customers bank account and therefore requires an undertaking from the supplier that this position of trust will not be abused.

Clearly the DD arrangement is of more benefit to the supplier than the customer as the supplier offers discounts for those paying by DD and links the most favourable tariffs with a DD payment as part of the contract.

Here is where the imbalance arises. The supplier begins to abuse the DD scheme. Suffering from restricted rolling credit by the banks the supplier then regards the collective DD customers as a new source of borrowing. DD are adjusted upward as a matter of course (e.g. mine which is a fixed rate) and the review is set quarterly in advance so that the DD is either at zero or in credit by the end of the quarter. A DD scheme has been converted into a quartely billing system, payable in advance. If this were offered as a stand alone payment plan I wonder how many would subscribe to it?

Is this not against the principles of the DD scheme and an abuse of the trust a customer puts in the supplier.

I would not object to considering this if the supplier was open about their difficulties and paid me additional interest for providing them with borrowing facilities. I would of course have to decide if they were a good risk before agreeing to such a proposal. If not I would continue with the DD scheme in its intended form.

Instead the supplier foists this arrangement upon customers. As Incisor notes (as do you) a DD can be cancelled. That involves cancelling the price plan you are on and starting a new one which is almost always more advantageous to the supplier (which you do not point out). Suppliers seem to be creating a win win situation for themselves. We take whatever we like from your account or else you go on a more expensive energy contract.

Now estate agents are almost extinct it is little wonder energy companies are taking their place in the popularity stakes.

eira

This was my objection-the abuse of the DD system and it is this that Scottish Power refused to admit. I understand that some DD are variable but you sign onto them with a measure of control over that 'variability'.If I pay £30 for an allowance and then exceed it I expect that to vary if I exceed the allowance.What I bitterly objected to was Scottish Power raising the DD and then foprcing me to argue the sum down. And as for opening up new DD when the account was closed ........I can't find anything that gives anyone or thing permission to open new DD without notification or permission.As far as I'm concerned one DD means just that unless there is prior notification or agreement. It has made me very wary of DD-I have been bitten before on the credit card equivalents of DD but I didn't expect the same thing on a bank DD

Incisor

eira wrote: »

... It has made me very wary of DD-I have been bitten before on the credit card equivalents of DD but I didn't expect the same thing on a bank DD

Yes, the CC equivalent is just the thin edge of the wedge. Certainly there is a huge realignment required in the call centres. There seems to be an arrogant assumption amongst the lower orders in call centres that they have the right to help themselves to what they want from your bank account - and their bosses don't seem all that concerned to educate them differently.

BallandChain

brysiewysie wrote: »

Well I must say that's a fine set of responses. I'd argue the thread deteriorated before I let off steam.

You're right I'm obviously a company man through and through, I never challenge my employer on issues when I think their DD scheme is wrong or creating problems, I post only when I work, I don't have my own opinion and I only post what my company would want me to post.

I must say responses like many here on this thread make the time I decide to devote to this forum after or before work of no benefit to me. I do my utmost all day every day to help educate customers on the way the DD scheme works and I thought that trying the same thing here could be of benefit to some, which it possibly has been.

I can't be bothered contributing anymore to this gas and elec forum (the only one I've ever posted in) when it turns out getting in my view too abusive on here from certain posters - I'll do something else with my spare time.

Good luck to those energy supplier employees who will continue I'm sure to add some sensible, helpful comments.

Bye

If you will dish out abuse what do you expect? It's sad that you feel you must leave and it would have been of more benefit to the forum if you had stayed.

DirectDebacle wrote:

Perhaps the energy industry employees who read these posts could put in the suggestion box where they work that fully informing customers of how and why deductions from their customers bank accounts are varied from the initial agreement might be of benefit to the company and customer alike.

Excellent suggestion! I'd also go further and add that it should be put to the energy companies that transparent billing in an easy to understand format shouldn't go amiss. Let's see an end to all these various tariffs and keep things simple.

littletommytucker

I totally agree with the last post, and have made the suggested suggestion.
From speaking to customers on a day to day basis, and through reading these forums, everyone is obviosuly under the impression that when there DD amount has been recalculated, it has been set for the forth coming 12 months. At this time of year it is normally the case that it has been scheduled to increase for the next 3 or 4 months, so that on reciept of the heaviest bill, the account will balance at £0, instead of going into debit. Then no doubt the Direct Debit would drop back down to a more reasonable amount, starting to build up the credit again over the summer.
Why this isnt made clearer on the bills i do not know!??!
A clear calculation of the way the DD has being calculated would save the Big 6 thousands, as more than 50% of calls at the moment are questioning Direct Debit increases.
I understand why customers feel it hard to establish why there amount is increasing in spite of being in credit, even if you were £150 in credit, its improtant to remember that if your last bill in January was £250, then using the same amount this year would cost £405.
Once people realise just how big bills are set to be this year, they then realise why the DD needs to increase to end with a £0 balance.

DirectDebacle

littletommytucker wrote: »

At this time of year it is normally the case that it has been scheduled to increase for the next 3 or 4 months, so that on reciept of the heaviest bill, the account will balance at £0, instead of going into debit. Then no doubt the Direct Debit would drop back down to a more reasonable amount, starting to build up the credit again over the summer.

A DD is set up initially to provide 12 montly payments so that the balance is at zero after the 12th payment. If a DD is set up in June then it finishes the following June. It is recognised by both parties that at some point one or the other parties will be in debit. Temporarily increasing the DD to ensure the supplier has the winter quarter paid in full was never part of the agreement. Customers choose to pay by DD to even out energy costs over the year and avoid this large winter payment. See my other post re advance payments of quarterly bills.

Why this isnt made clearer on the bills i do not know!??!

Because it is an abuse of the DD sytem. Customers understand that a DD will rise to cover a price increase. They do not appreciate the energy companies unilaterally changing the accepted application of a DD scheme for their own purposes. Some customers find it a trifle irksome when their bank accounts are raided for unjustified sums and not told why.

Stoupa

We switched to Npower after receiving a quote for £105 @month one year ago.However in March our payments were increased to £188 which was too high but as we were able to contact them we paid for 6months accepting that we were overpaying and would be in credit,but as fuel prices were on the up we thought at least we will be well covered.
NPower estimated our bill even though we left our reading on the door on the requested day.The electric was underestimated by 10% and the gas overestimated by 30%,they calculated our payment to be £279 per month.We contacted them with our actual reading and they said that they were having problems with mistakes on bills.They took our new reading and sent out another with the electricity increased but no decrease for the gas!
My husband contacted them again and they said we should be paying £173 per month,but that evening we got a paperless bill for £198 but we were now £125 in credit.As my husband has been away for the weekend and they won't discuss the account with me we haven't resolved this yet.Our Gas and Electricity useage for w\e 27/11 which was a slightly higher than normal useage week for us equated to £105 per month(since May we have had a more energy efficient boiler).My husband will phone tomorrow and offer to pay £120 per month ,hopefully they will accept this or we will have to go back to paying each quarter which we would prefer not to do.There are 3 of us(all out of the house between 9 & 6 each weekday, living in a medium sized 3 bedroom 50 year old detached house.Any advise would be appreciated.

DirectDebacle

You need to do your own re-calc. Bear in mind that npower had a price increase in Jan this year and another in August so your DD is going to be much more even if you think you are going to use less energy than last year.

Get your bills for the previous year and total out the kWh you used for gas and electricity for the year. npower have very high tier 1 rates for gas if you are on their two tier pricing. This is charged on the first 4572kWh so multiply this by the high price and add 5% VAT. Deduct 4572 from your annual kWh gas usage and multiply by the lower price and add vat. This will tell you what your gas bill should come to over the next 12 months at todays prices.

Do the above for your electricity. Divide each by 12 to give a monthly DD for gas and electricity. Now you have a starting point. You can make an adjustment for any credit balance or discounts you may receive. If you reduce your gas consumption because of a new boiler do not be over generous with the amount of gas you think it will save. You now have reasonable figures to discuss with npower.

Alternatively put the annual kWh into a comparison site together with the price plan you are on and it will tell you what you should be paying. These sites are not always accurate though.

MarkyMarkD

backfoot wrote: »

Just catching up with this thread. A month or so back, I had a blatant overcharging situation with BG. The detail is contained in the thread http://forums.moneysavingexpert.com/showthread.html?t=1181149

At the time a BG employee (MarkyMarkD) tried valiantly to convince me and other readers that all was well with the process. Well unfortunately it wasn't and eventually the DD's did get reduced but not without determined action.

Still not properly satisfied I wanted to discover the true mechanics of what had caused the ridiculous rises when I was moving to a cheaper tariff. Two letters requesting this information were answered but not giving any remote explanation or number crunching to satisfy me.

Later a further Customer Service survey asked if my problem was resolved.Obviously I gave chapter and verse again but no further contact has been made.

Rumbled?

As usual Direct Debacle has summed the situation up very well. Simple clear statement of the calculations giving rise to an increase would satisfy us all. Atlantic energy actually did this when I was with them. I am not sure if they continue but that was the best practice I have seen.

Excuse me a cotton-picking minute. When on earth did I become a BG employee? I have posted numerous times stating that I have never, ever, worked for any company in the energy supply business.

I agree wholeheartedly with DirectDebacle's comments about clarity. It would be ridiculously simple for the energy suppliers to state, at the time of every DD review:

Expected usage over the next x months: y kWh
Current price/kWh z pence
Current standing charge a pence/day

Total charges expected over the next x months = £aa.aa
Current account balance = £bb.bb

Amount to be paid over the next x months = £cc.cc

Divided by x = £dd.dd per month.

That's your DD amount.


I can't for the life of me understand why the energy companies don't provide that analysis for their customers.

But I don't accept the general tenor of this discussion, which is to claim that the energy companies basically perform that calculation and then add a random amount to the DD payment due.

I honestly believe that they perform exactly the calculation I've laid out, but that they don't give customers all the information so customers normally (wrongly) believe that they are being overcharged.