MSE news: Crackdown on exorbitant energy direct debit demands

galba

1carminestocky wrote: »

Have Ofgem suddenly been forced to accept performance-related remuneration? This is twice in 2 days they've gotten oh so tough.

It's the election I think. The Cameroons are already promising to chop the legs off Ofcom and most of the other quangos will be shaking in their boots a little.

In any case these are as yet just proposals - concrete action may or may not follow.

DVardysShadow

MarkyMarkD wrote: »

This whole issue is a lot of nonsense.

In most cases where people reckon that their monthly payments are too high, they aren't. And in most cases where people cannot understand why their monthly payments are increasing despite them being in credit, there is a good reason.

The interest lost by being in excessive credit - if indeed you are - is buttons at the moment. And the interest earned by the energy companies across their whole customer base is less than nothing because more customers owe them money, than are owed money.

The whole issue has been blown out of all proportion.

The OFGEM changes will simply lead to better explanations by companies of the DD amounts they set, not to reductions in those amounts.

The explanations would be a good thing. Everytime I have asked for an explanation, Gas and Eelctricity have refused and said the information is a commercial secret. Would you believe.

So, given that the companies are not open about how they set DD payments, I don't think you are in a position to call nonsense on people who reckon their DD payments are too high. You are at least as much in the dark as they are.

Katie-Kat-Kins

About time something was done about this.

Our electric company have proven that there is no logic behind the way they set our DD.

We provided details of our usage when we started being supplied by them and they set our DD to a level which seemed reasonable. A little cheaper than our old supplier but not much. We thought this sounded about right and left it at that.

A few months later and energy prices were rising. They had not taken or received a meter reading but felt it appropriate to reduce our DD by more than 50%!!!

(DH who isn't very savvy about these things didn't tell me and it didn't come to light until we got a bill based upon our actual usage otherwise I might have queried this!)

Anyway it didn't come to light until we were £1500 in arrears, I'm happy to pay for what I owe but I do think that their conduct has been questionable. It was blatently obvious that we would run up arrears if they cut our payments by so much.

They have now increased our payments to cover the arears which is fair enough but they are basing future estimated bills on usage that vastly exceeds our actual usage or the average usage over the last year (which was higher than current usage due to changing a couple of appliances).

They will not accept that this is unrealistic despite us providing regular readings.

I'm getting heartily sick of it all as we can't even supply our readings easily online because their website isn't set up for economy seven readings - grrrrrrrrr

The whole thing just smacks of them using customers for cashflow.

MarkyMarkD

Your post makes sense, until the last sentence.

How can you possibly say that it smacks of them "using customers for cashlow" when they set your DD level far too low, before increasing it to far too high?

All this smacks of is poor systems, rather than systematic use for cashflow.

Which is what applies across the industry IMHO. (Where it isn't simply a case of customers not understanding that they actually SHOULD have a large credit balance on their account, at certain points in the annual billing cycle).

People seem to think that "(current o/s balance + expected usage for the year) / 12" is the right amount for their monthly DD. That is cobblers. That only works if your review year ends in about May. If your review year ends at any other point, then you should end the year in credit because you will have gone through the cheap months of the year and have the expensive months to come (based on your main heating fuel).

Most of the gripes are from people with September or similar review dates, who seem surprised that they are in credit by a few £, but also have to pay more if their unit prices have increased. Don't be silly! If you are NOT in credit in September, then you have been paying too little.

Katie-Kat-Kins

I think it makes sense, they are setting DDs deliberately low so that they can then prevent you from easily switching because you have significant arrears. They then increase the DD excessively and you build up a big credit balance that they can sit on for a while before starting the process again.

Bearing in mind that they have different customers all at different stages they potentially gain funds they wouldn't normally have access to.

In my line of work we have to account for every penny of customer money we hold for any length of time. We also have strict controls so that all interest is paid out to the customer. Even a penny overpaid against a bill and held until the next bill is due has to be accounted for. Seems to me that these energy companies are being less than honest.

It is more than just bad management. If it was just bad management why decrease a DD when there is no indication that the payment is in anyway too high???

If they had increased the DD on the basis that energy prices were going up and that if our usage stayed static our bill would go up I would have understood the logic and more readily accepted it.

Mark_Hewitt

I'd expected this thread so be full of people with DDs that are too high as that's what MSE is banging on about.

I've done some calculations and found out that my DDs are too low too!

My electricity was £47 a month and I've worked out our actual usage is around £52 per month, not a massive difference, but they've just put our DD down to £37 a month.

If I ring them up (npower) will they put it back up again? The same with my gas (e.on) I'd like to put my DDs up a little bit now to avoid them going up massively in six months time.

MarkyMarkD

Any survey on this issue is biased because few people complain they are underpaying and many complain that they are overpaying. The truth, from the energy companies' accounts, is that overall people owe THEM money, not the other way around.

Cardew

MarkyMarkD has got it exactly right.

This forum is full of posts that protest loudly that:

A. The DD is set too high - and they are earning interest on my money etc

B. The DD is set too low - and they allowing me to run up a huge debt, thus trapping me.

A lose/lose situation for the companies!!!

womble_lancs

I had several arguments with my gas/electricity supplier when they tried to put up my DD by 50%, despite the fact that I was over £300 in credit. In the end, I cancelled my DD and opted to pay by Standing Order, so that I was in control of what I paid.

The staff on the phone were very patronising and told me that I was "foolish" and might have difficulty in paying if my winter bill was more expensive than anticipated. I told them that I didn't have a problem with ability to pay, I just had a problem with them taking more money than I actually owed them and then having to fight tooth and nail to get it back.

I don't care if I've lost my measly £5 discount for paying by DD, because I have a current account mortgage, so my money is better off sitting in my account than in theirs.

I did consider going onto the DD where they take only what is actually owed at each billing date but I scrapped that idea when they started to send me over-estimated bills, despite the fact that the meter had actually been read.

I just don't trust them.

Katie-Kat-Kins

Soooo perhaps if they really want to become more accurate they should be encouraging people to supply regular readings and making it easy for them to do so and then adjusting bills and DDs accordingly.

My friend couldn't get her DD increased recently, this was for her gas when she switched from electric heating to gas, and knew her usage was going to more than double - DOH!!!

The companies seem to like having people trapped in this cycle of too low and too high DDs and i think it is because it discourages them from switching. Bear in mind also that while they have a number of people in debit they have the option to call in this debt when convenient to them thus increasing cash flow.

It isn't too much to expect for them to be reasonably transparent in setting DD amounts and that they respond to requests to change these in a fair and transparant manner. Changes should not be made unilaterally without some sort of trigger event and and explanation being provided. Any proposed change should be accompanied by a suggestion that the customer supply a meter reading to check the accuracy of a proposed change.

I have no problem with my supplier writing to me and saying for example that in light of increases in per unit costs they are increasing my DD by 10% to avoid arrears but that they will recalculate if I supply a reading. But an illogical and unexplained change is bound to irritate especially if it leads to a surplus or defecit!