E.ON press the re-set button

backfoot

meggsy wrote: »

As a 'potential' E.on customer I am now thinking there is no chance of me ever switching to them. I would think that everyone else who reads this thread must be taking the same view !

I would also like to join Eon as well. (whether they would have me is a different matter...:D).

With this in mind, I have written to Martin Abraham (Ofgem) today, asking if he has any further details on the new Eon DD scheme as Eon are unable to provide any.

I also asked that if they can't answer to a system implemented over a month ago, whether they are compliant with their Licence.

Given the very 'gushing' press release by Eon, I presume they had cleared it and the associated procedures, so that the Ofgem DD factsheet could be updated.

backfoot

jalexa wrote: »

I know that not everybody agrees with my analysis of Consumer Focus (though I accept it is not reasonable to expect their open comment on a developing issue). That said, only one organisation was responsible for the gushing press release welcoming the E.ON annoucement as (from memory) a "victory for common sense".

I don't share your analysis as you know.

Try writing to Audrey Gallacher directly. On a separate matter,(exit fees) I got a substantive response from CF within an hour today.

Blackdog

meggsy wrote: »

As a 'potential' E.on customer I am now thinking there is no chance of me ever switching to them. I would think that everyone else who reads this thread must be taking the same view !

I am sure you are not the only person holding off from joining Eon. It is a mystery why they don't post again on this (their) thread to clear up some of the questions that have been raised. The longer they are absent the worse it will get for them.

backfoot

Blackdog wrote: »

I am sure you are not the only person holding off from joining Eon. It is a mystery why they don't post again on this (their) thread to clear up some of the questions that have been raised. The longer they are absent the worse it will get for them.

You are right. My view is that Eon took us for fools. They were sadly mistaken.

They didn't reset anything. The more than 12 month recovery was already in place. It didn't work then because :

1. It was still asking customers to fund Eon, especially after price increases or consumption change.
2. The 3 month window for review allows manipulation and retains short year recovery.
3. The complexity is inherently non SLC27 compliant.
4. There was no up front clear explanation (due to complexity and policy)
5. It is unenforceable if not a clear and full contract condition.
6. DD changes are not fully explained because it is too complex to do a calculation and present it on a bill.

I don't think anything has changed. If they have, will Eon tell us how ? After 3 weeks, it is looking unlikely.

In my view Ofgem can't fail to act or they themselves will be complicit in a cover up.

Eon need to act quickly and amend their system back to a 1/12th basis. Any other action or inaction is untenable.

JimmyTheWig

backfoot wrote: »

Eon need to act quickly and amend their system back to a 1/12th basis. Any other action or inaction is untenable.

Just out of interest, given that Eon have been reasonably clear that they give a discount because they benefit from the average positive balance, would you accept it if they had one tariff as it currently is (zero spring balance) and another (slightly more expensive) tariff where you pay on a 1/12th basis?
[If so, what sort of price difference would it take for you to choose the zero spring balance tariff?]

backfoot

JimmyTheWig wrote: »

Just out of interest, given that Eon have been reasonably clear that they give a discount because they benefit from the average positive balance, would you accept it if they had one tariff as it currently is (zero spring balance) and another (slightly more expensive) tariff where you pay on a 1/12th basis?
[If so, what sort of price difference would it take for you to choose the zero spring balance tariff?]

Compared to the 1/12th basis? On an interest basis, I think the differential is quite small. We would need to calculate the difference of the average balance and then apply say 3% (current easy access savings).

I don't think that the objection to zero spring balance arises from the differential cost (or interest loss). The problems arise because of the cash flow implications on stretched budgets. The sudden changes and short year collection has a significant impact. It is a false dogma that a zero spring balance is a good thing or sacrosanct.

DD schemes started originally to principally suit the Suppliers. The dscounts offerred were an inducement to get customers to move to the much cheaper collection method. Cost of account collection is much lower, cash flow is improved rather than quaterly collection in arrears and bad debts are reduced.

Eon typically have spun a different story in claiming they offer a discount because of the cash flow benefit to the customer. It is a clever spin again and easily swallowed.

The original DD scheme has been cynically amended by Eon and until now they have got away with it.

It's up to Eon what discount they offer and that will determine their competitveness. I don't have a problem with that because it is open and upfront. I don't like, at all, this ongoing PR of pulling the wool over customers eyes and operating outside of the Regulatory framework.

Eon have a number of hidden practices which I assumed their 'reset' would address. I listed a few at the start of the thread.
They haven't lived up to expectation imho.

A lot of wealthy or comfortable people will not be exercised by this but I think we need to consider those struggling to make ends meet.

jalexa

JimmyTheWig wrote: »

given that Eon have been reasonably clear that they give a discount because they benefit from the average positive balance,

Yes, there is a reference "somewhere" to that (failed to find it quickly this morning) but I'm not sure I agree with "reasonably clear". It's not referred to in the .pdf guide and the FAQ only says this...

How does Direct Debit work?

Each year, you'll usually use more energy in winter and less in summer. Rather than paying a high bill in winter and a low bill in summer, paying by monthly Direct Debit lets you spread the cost more evenly over the year. And we give you a discount for paying this way.

Sadly just "weasel worded" spin like, in particular, the .pdf guide.

I would have said, taking account of everything said about Direct Debit on the E.ON website, there is no obvious expectation that the process might result in a "sudden excessive hike" destroying at a stroke the "level" payment objectives of fixed regular direct debit.

JimmyTheWig

Backfoot, I'm not sure that you quite understood my point.

Lets say they introduce three options.

1. Paying quarterly in arreas.
2. Paying by direct debit on a 1/12th basis.
3. Paying by direct debit with a zero spring balance.

There are clearly benefits to Eon if a customer chooses option 2 rather than option 1. So customers choosing option 2 would receive a discount from the option 1 price.
There are also benefits to Eon if a customer chooses option 3 rather than option 2. So customers choosing option 3 could receive a bigger discount off the option 1 price - i.e. a discount from the option 2 price.

SnowMan

JimmyTheWig wrote: »

Just out of interest, given that Eon have been reasonably clear that they give a discount because they benefit from the average positive balance, would you accept it if they had one tariff as it currently is (zero spring balance) and another (slightly more expensive) tariff where you pay on a 1/12th basis?
[If so, what sort of price difference would it take for you to choose the zero spring balance tariff?]

It is an interesting idea worth exploring, but not one I would support.

In the surveys you see statistics like half of all households have no savings and are struggling to get by day to day.

So to force these households to loan (say) £200 to EON is going to cause obvious difficulties for customers. It may mean that £200 of other living expenses and resulting purchases are placed on their credit cards (worse still payday loans) and we know what the APR is on these. It also shows a lack of corporate responsibility by EON (and if customers switch to quarterly bills it means a further push towards a system where those who are struggling most with finances paying the highest unit costs)

If companies are allowed to set up separate direct debit tarriffs for wealthier customers (alongside a more expensive 12 month direct debit anniversary tarriff) which involves a mix of paying for utilities combined with providing credit to EON i.e a savings element (as EON are effectively doing now albeit for ALL customers) isn't that just a way of getting around the rules that apply to savings institutions.

The credit itself is not protected by the Financial Services Compensation Scheme and no savings tax is paid on the savings account element of the account so it just doesn't fit into the system in any way. If EON want to offer savings accounts they should apply for a banking license and operate a separate savings institution.

So in summary direct debits should be set on the basis of a simple 12 month anniversary system for all

backfoot

JimmyTheWig wrote: »

Backfoot, I'm not sure that you quite understood my point.

Lets say they introduce three options.

1. Paying quarterly in arreas.
2. Paying by direct debit on a 1/12th basis.
3. Paying by direct debit with a zero spring balance.

There are clearly benefits to Eon if a customer chooses option 2 rather than option 1. So customers choosing option 2 would receive a discount from the option 1 price.
There are also benefits to Eon if a customer chooses option 3 rather than option 2. So customers choosing option 3 could receive a bigger discount off the option 1 price - i.e. a discount from the option 2 price.

Hi Jimmy,

No, I think, , I fully understood your point and tried (but obviously failed) to answer it by saying calculate the difference in average balance under each alternative and multiplying by say 3% p.a.

I don't want to do the calculation because it is long winded and complex under the seasonal adjustements. My gut feel is that the differential between your two DD options is small and around 0.75%, if there is no other change. When there are price increases etc., the differential rises.

That is the customer viewpoint. The advantage to Eon is much greater for the reasons I explained earlier,debt collection etc.

If I am still missing the point, please calculate it yourself and explain what you are getting at.

As I said,it is the cash flow implications rather than the interest loss that concerns me most.

Eon started their 'reset' because of Ofgem's Retail Market Review. The mutual objectives were to avoid mistrust and provide clarity, transparency and fairness.

The first attempt has been an unmitigated disaster because for me it has built up mistrust. The ongoing silence makes it even more so.

I don't want more tariff options and nor does Ofgem,so I prefer a simple 1/12th DD option, that we all understand.