British Gas Tariff - How do they work out monthly payment ?

lgb2100

At the start of 2009, I was paying £23 monthly charge for by Electricity to British Gas.

This resulted with my February bill stating that I owed £38.46.
However BG did not increase my payments.

May Billing - I owed £31.05, but BG still did not decrease my payments.

August Billing - I owed £26.91, However BG decided to reduce my payments for June/July to £20.

November Billing - I owed £26.25, however BG has now decided increase my monthly payments from £20 to £25 (from 28 Nov) !

I telephoned BG, and asked for them to explain why the 25% increase in payment, in which I was told that it was to recover the outstanding amount.

When questioned, why my payments was decreased during the summer (when having an outstanding amount), I was told that that was to pass on the 10% decrease in Electricity prices to it's customers.

(These price changes, I was not informed of by BG, other than when I received my billing)

My annual estimate for Electricity (on Websaver 4) is 2752kwh which equates to a monthly payment (after discount), to just less than £23/month.

However - Today I have received a letter from British Gas informing me of a price Change to my Payments.

"Good news!, We've just reviewed your Electricity payment plan, and we can decrease your payments", signed by Flare Barrows, Head of Billing and Payments.

They have now 'calculated' that as from Dec 28, my New Monthly payment will be £5

How was this calculated ?

( I estimate, that from this years usage, and my outstanding amount, it should be around £28 to £30 month)

Is British Gas allowed to change it's customers payments without informing the customer first ?

This is the first letter over two years informing me of a price increase/decrease (other than what's is shown on my bills).

I know that if British Gas takes just the £5 from December my outstanding amount owing will increase (I'd rather have the remaining £20 sitting in my bank account).

Is this British Gas' method to retain it's customers, by increasing their amount owing, so that if thy decide to leave, they would have to make this payment prior to leaving - which they make not be able to do ?

Premier_2

Monthly billing is calculated by taking your estimated annual cost of consumption and dividing that by 12. As you can see, it's not an exact science but is regularly reviewed.
For every post on here about a customer being in debt to their energy supplier because they are paying too little, there is probably a similar of posts by a customer saying they are in credit

I presume you are paying by DD? If so, then yes you agreed to a variable DD so BG can vary the amount. However, they would be required to advise you in advance of any variation in the amount to be collected.

lgb2100

Premier wrote: »

Monthly billing is calculated by taking your estimated annual cost of consumption and dividing that by 12. As you can see, it's not an exact science but is regularly reviewed.
For every post on here about a customer being in debt to their energy supplier because they are paying too little, there is probably a similar of posts by a customer saying they are in credit.

According to the example on the back of the letter, the review plans could be calculated over 10, 11 or 12 monthly instalments.

So BG, as they've decreased my payment to £5 (almost 80% reduction), they estimate my usage for next year is going to be less than 600mhz.

Wow, those free Energy Saving Lighbulbs I received from them must be working wonders ! :rotfl:

I presume you are paying by DD? If so, then yes you agreed to a variable DD so BG can vary the amount. However, they would be required to advise you in advance of any variation in the amount to be collected.

So all these years they have not informed me of a change in DD payment, BG has been breaking some form of rule.

So basically, If BG do not inform me of any change to this DD, then from 28 Dec, I will continue to pay £5 month.

Even a pre-teen can do basic maths to work out that paying £23/£20 a month for a year, and have an outstanding balance does, not generate a reduced payment by 80% - if anything, it should increase, or remain the same (if it appears that the owed amount is decreasing).

dogshome

Hi lgb2100 - BG and all the other distributors have some very fancy software that calculates your cost and level of Direct Debits, but it can't factor in your individual lifestyle, a spell of mild weather in your postcode or that you had two friends staying with you for a fortnight, so in fact it's all based on guesswork.
From your post you already have part of the answer - At the start of 2010 you will be able to take a meter reading that is 365 days on from your Start Reading with BG, which will give you the figure for a complete years consumption. Apply this amount of use to the tariff you are on and work out your annual cost. Divide this by 12 and that is what you should be paying a month. Then when ever you get a Direct Debit change notice, phone BG, quote your figures and ask them to work it out for themselves.
Best of Luck

Joyful

Sorry you are having problems. Like all systems sometimes it cocks up. It has done before with mine too. You are doing he right thing on checking it so please give them a call otherwise as you are aware the next time it will go up lot more.

hansi

Why don't you switch to Energy Smart? Then you'll only pay for what you use by VDD!:j

Premier_2

lgb2100 wrote: »

...
So BG, as they've decreased my payment to £5 (almost 80% reduction), they estimate my usage for next year is going to be less than 600mhz...

The monthly cost would be based on your anticipated annual usage and would allow for any credit they believe you may have accrued.

If you feel they have made a mistake, why don't you contact them to discuss the amount?

lgb2100 wrote: »

... So all these years they have not informed me of a change in DD payment, BG has been breaking some form of rule.

So basically, If BG do not inform me of any change to this DD, then from 28 Dec, I will continue to pay £5 month...

Yes, any company that collects payments by DD must inform the payer of any change in the amount to be collected in advance.
Failure to do so can result in the Payer requesting immediate and full reimbursement from their bank under the terms of the DD Guarantee (Advance Notice not given).

lgb2100

hansi wrote: »

Why don't you switch to Energy Smart? Then you'll only pay for what you use by VDD!:j

I would have to switch plan with BG, in order to have Energy Smart - I am Websaver 4.

Unsure if switch another plan , in order to have Energy Smart bolt on will actually lower my payments/comsumption.

Just e-mailed BG, for them to confirm my payment from Dec - I am sure it will be revised. If not, prior to my next bill, I will make a payment that will cover what I think is owing, and see what they expect my monthly payment will be.

lgb2100

Premier wrote: »

Yes, any company that collects payments by DD must inform the payer of any change in the amount to be collected in advance.
Failure to do so can result in the Payer requesting immediate and full reimbursement from their bank under the terms of the DD Guarantee (Advance Notice not given).

Thanks Premier,

That what I thought, and mentioned that (when I called them in Nov when they reduced my payments earlier in the year, without informing me.

Have contacted BG, to give them the chance to correct my monthly payment.

Will see what DD debit comes out in Nov & Dec