E.ON press the re-set button

DirectDebacle

JimmyTheWig wrote: »

I totally take your point, backfoot. (And I don't think they'll be offering a 25% discount!)

But to play devils advocate, the people you are talking about are exactly those who would be unable to switch suppliers if they had a negative balance. I know that they could pay the difference between 1/12ths and zero spring balance payments into a savings account so that they would always be able to pay off any negative balance if they wanted to switch. But to be realistic, the people you are talking about wouldn't do that.
Moving forward, if all suppliers did the same (I know you all hate that idea) and any credit balance from one was paid directly to another on switching then these people would always be able to switch. This would increase competition, and so (theoretically, at least) bring down prices.
I think it would be tough for these people to pay this for the first 6-18 months but I would imagine that given they had little choice they would cope. And from that point on there would be little difference between this and 12ths. Forever.

But to play devils advocate, the people you are talking about are exactly those who would be unable to switch suppliers if they had a negative balance. I know that they could pay the difference between 1/12ths and zero spring balance payments into a savings account so that they would always be able to pay off any negative balance if they wanted to switch. But to be realistic, the people you are talking about wouldn't do that.

How do you know this. Surely some of 'these' people wouldn't even be able to put anything in a savings account either.

Moving forward, if all suppliers did the same (I know you all hate that idea) and any credit balance from one was paid directly to another on switching then these people would always be able to switch. This would increase competition, and so (theoretically, at least) bring down prices.

Some of 'these' people will always be in a position where they are required to pay a DD which could cause hardship and have no credit balance to help. University students are one example, many of whom will be taking on their first ever supply of energy in Sept/Oct of the year. I don't see how, even theoretically, the situation will exist where all energy customers are 'spring aligned'.

Such a rigid policy will continue to cause hardship for a significant amount of financially vulnerable customers and they are the ones that require protection.

I think it would be tough for these people to pay this for the first 6-18 months but I would imagine that given they had little choice they would cope.And from that point on there would be little difference between this and 12ths.Forever.

The answer is not to reduce choice and cause hardship for those already struggling under the 1/12th system. The answer, as I said earlier, is to increase choice by offering a spring balance as an option to those who find it attractive. This does not cause additional hardship to anyone.

It reminds me somewhat of paying for a TV licence by DD. The first time ever that you set it up you pay double for the first 6 months. Then for the rest of ever you pay 12ths.

If you really don't like the idea then pay quarterly in arrears until you get round to spring, then go on to direct debit, which will be pretty much the same as 12ths

Except most people have a choice of whether or not to own a TV whereas there is much less choice in respect have having an energy supply to your dwelling.

For 'these' people, as you call them, the reason many are on a 1/12th DD is because it is 'these' people who were the ones struggling to pay winter quarterly bills in arrears. How is returning to a payment method they previously struggled with going to be any less of a burden than coping with inflated DD payments in order to balance their accounts at the end of winter.

A zero spring balance is a much more desirable thing for a supplier than a zero balance at other times of the year.

The argument is not the merits or otherwise of accounts being in balance at the end of winter. It is whether or not it is right for a supplier to enforce a policy of their choice upon all their customers where that policy can cause detriment to some of them.

JimmyTheWig

backfoot wrote: »

On a quarterly billed basis paid in arrears, following a price rise of 18%, I would expect the customer to pay 18% more. What zero spring balance does is to accelerate that amount because it not only recovers the current consumption but takes into account that increase on future consumption and expects early settlement. That recovery rate is massive when the zero balance date is only a few months away. The reset doesn't address this at all.

If the price rise was in October then the next quarterly bill would be 18% higher, yes, but it would be 18% of a large bill higher, because it would be cover autumn/winter months.
Note that quarterly billed customers are zero spring balanced by default.

I am not sure that I am going to convince you ,because you have it fixed in your mind that it is an imperative that zero at April is ideal. I don't share that view whatsoever, because I can see the impact it generates.

Seasonality in itself will level off the balance naturally towards the lower consumption months but there is nothing sacrosanct that it must be zero at April. If you think it is then Eon have successfully brainwashed you.;)

I don't think I've been brainwashed. As it happens I left Eon abuot 6 months ago because we got a better price from EDF.
I think that zero in April (or rather never having a debit balance) is ideal because
(a) it means that everyone would always be in a position to switch which would be a huge benefit to those struggling with cash flow, and
(b) making switching more possible for more people would help improve competition which should bring prices down.

Cash flow isn't a problem for me - I'm a Stoozer. So the only personal benefit would be in part (b). But that doesn't mean to say that I'd argue for that at the expense of others. Quite the opposite, in general, I'd rather see a fair policy in place than one that benefits me. [And as a Stoozer, you could argue I'd be better off with the biggest debit balance on my utility bills that I could get away with!] But anyway, part (b) only happens if part (a) happens.

DirectDebacle wrote: »

How do you know this. Surely some of 'these' people wouldn't even be able to put anything in a savings account either.

My point was on the basis that if a larger (i.e. zero spring balance, or quarterly in arrears) bill came in that they would somehow manage to pay it. And so in the same way they could afford to pay the reduced (i.e. 12ths) bill and put money into savings.
But there wouldn't be the same incentive and so they wouldn't.

University students are one example

A good example. Probably the last time I, personally, really had an issue with cash flow.
We had quarterly billing in arrears. Don't think DD was that big back then.
When the bills came in, we struggled to pay them. Sometimes we had to make sacrifices in order to do so.
If we had the choice of paying for less than we'd used for the time being (which is what 12th billing is, if you start in the autumn) then we would have done that and not made the sacrifices.
If we then wanted to switch providers (though I'm ashamed to say we didn't even consider this at the time, the whole time we were there) we wouldn't have been able to afford to do so.


That's not to say that there aren't people out there who can't afford to pay for the energy that they need. For those people I would like to think that as a society we would provide help.

jalexa

JimmyTheWig wrote: »

I don't think I've been brainwashed. As it happens I left Eon abuot 6 months ago because we got a better price from EDF.
I think that zero in April (or rather never having a debit balance) is ideal because
(a) it means that everyone would always be in a position to switch which would be a huge benefit to those struggling with cash flow, and
...

A few comments. The Edf process is "identical" to the Eon process prior to the "up to 18 months for second half starts" (if such a reset does actually exist).

There is one difference however, currently Edf appear to be more flexible on restoring or adjusting payments than the E.ON "hardball" reported in this forum. Note that I have not seen any forum report of E.ON's calculation explanation complying with SLC27.14 and I know from personal experience Edf are unable to explain their calculation.

Your argument (a) doesn't make sense to me. Indeed I think it is slightly absurd. Direct debit customers with a debit balance while maintaining an agreed payment schedule are not blockled from switching. Indeed that is exactly what they should do because that delivers an initial 12 month payment schedule with the new supplier, not the "sudden excessive hike" that a short-year "spring aligned" recalulation delivers, improving the very customer cash-flow you recognise as an issue.

SnowMan

JimmyTheWig wrote: »

I totally take your point, backfoot. (And I don't think they'll be offering a 25% discount!)

But to play devils advocate, the people you are talking about are exactly those who would be unable to switch suppliers if they had a negative balance. I know that they could pay the difference between 1/12ths and zero spring balance payments into a savings account so that they would always be able to pay off any negative balance if they wanted to switch. But to be realistic, the people you are talking about wouldn't do that.
Moving forward, if all suppliers did the same (I know you all hate that idea) and any credit balance from one was paid directly to another on switching then these people would always be able to switch. This would increase competition, and so (theoretically, at least) bring down prices.
I think it would be tough for these people to pay this for the first 6-18 months but I would imagine that given they had little choice they would cope. And from that point on there would be little difference between this and 12ths. Forever.

It reminds me somewhat of paying for a TV licence by DD. The first time ever that you set it up you pay double for the first 6 months. Then for the rest of ever you pay 12ths.

If you really don't like the idea then pay quarterly in arrears until you get round to spring, then go on to direct debit, which will be pretty much the same as 12ths.

Asking people to put credit on their utility accounts would reduce the chance of them falling behind at a later date etc but it then becomes like someone being asked to pay the deposit on a rented property when they move. While in theory people may have their deposit on their previous property many people in reality can't afford to pay the deposit and really struggle to switch to new rented accommodation despite disrepair in their existing accommodation. And in the utility case many can't suddenly afford to put credit on the account in the first place and so will have to borrow the credit at exhorbitant interest rates.

One of the main points here is that EON (and EDF) are doing things differently to other suppliers and to how the scheme originally started, and have done so sneakily and without making it clear when the supply was taken up with them.

So I accept your argument of looking at the customer's full utility history not just their history with EON (so they theoretically may have a credit with their previous supplier by Autumn) but it doesn't change the fact that if a customer takes up a supply with SSE (say) they will pay by the 12 month traditional method, but with EON they need to put extra money (credit) onto the account.

If the direct debit scheme had started with every utility company running a Spring break policy then you might say fair enough. Yes that would have caused problems for people who first get their supply of utilities in Autumn but so be it.

However the direct debit scheme was actually set up to enable customers to spread their cost over the year, so all things working out as expected (and ignoring price rise complications) they would pay the same amount to the utility company each month not after a 6 month or 18 month period of paying a higher amount. Even EON's only documentation says this is the point of direct debits. But as demonstrated earlier numerically this is not the case with EON for someone joining late Summer they have to pay more to start with up to the Spring (or the following Spring) and only after then theoretically does their direct debit remain constant at a lower amount.

So suddenly switching from a 12 months scheme to a Spring break scheme just to help EON's cashflow at a time where many are already struggling with their finances is just not on.

JimmyTheWig

jalexa wrote: »

Your argument (a) doesn't make sense to me. Indeed I think it is slightly absurd. First of all direct debit customers maintaining an agreed payment schedule are not blockled from switching.

Have I missed the point here?

If someone joins a supplier in autumn and pays on a 1/12th basis, by the spring they will have a debit balance.
Are they able to switch supplier without paying off this balance? I thought not.

jalexa

JimmyTheWig wrote: »

Have I missed the point here?

The point I think you have missed is that there is an element of the "sudden excessive hike" which is not reflective of an actual debit balance but is a "projected debit balance", i.e. imaginary. The projection is based on held "assumptions" of annual consumption weighted in an undisclosed way taking account of seasonal consumption factors ahead of spring, giving for an April review (but not a July review which you don't favour) little time to build up a buffer.

Perhaps you are focussing exclusively on an actual debit balance which may or may not exist. Clearly that will require to be settled via the closing account at the conclusion of the switch.

JimmyTheWig

jalexa wrote: »

Perhaps you are focussing exclusively on an actual debit balance which may or may not exist. Clearly that will require to be settled via the closing account at the conclusion of the switch.

Yes, I am focussing on what is there and what would prevent people from switching.
If they were unable to settle the actual debit balance then they couldn't switch.
Then they'd be stuck paying the "sudden excessive hike", even if cheaper tariffs were available.

brewerdave

JimmyTheWig wrote: »

Yes, I am focussing on what is there and what would prevent people from switching.
If they were unable to settle the actual debit balance then they couldn't switch.
Then they'd be stuck paying the "sudden excessive hike", even if cheaper tariffs were available.

As I understand it,if the customer has been making the regular,previously agreed DDs, then a debit balance will not prevent a switch. The customer will just get a bill for the outstanding amount from the losing supplier, who will process the debt as any other if it is not settled in full.

JimmyTheWig

brewerdave wrote: »

As I understand it,if the customer has been making the regular,previously agreed DDs, then a debit balance will not prevent a switch. The customer will just get a bill for the outstanding amount from the losing supplier, who will process the debt as any other if it is not settled in full.

Not sure what you mean by "process the debt as any other". Would they allow it to be paid in installments, with no penalty, over, say, 6 months?

If so, I've got this wrong and zero spring balance is no better that the current system.
If not, then while these people are allowed to switch they are, in effect, prevented from doing so.

jalexa

JimmyTheWig wrote: »

If not, then while these people are allowed to switch they are, in effect, prevented from doing so.

I agree with the "brewerdave" interpretation that as long as the agreed monthly payments have been made any resulting debit balance is not grounds for transfer blocking.

Up to a point I agree that some comsumers may be between a rock and a hard place, having to choose between clearing an "actual" debit balance and paying a "sudden excessive hike" for several months.

You gave an example of an autumn start paying 1/12th payments having a debit balance by "spring". Well yes that is because spring is less than 12 months from autumn. Except of course, with E.ON this should not arise with initial payments correctly set and managed in accordance with the E.ON "Twitter Table". Perhaps the problem all along has been E.ON's failure to correctly set and manage the initial payment.

If so I do not believe it is right that E.ON's error should be remedied by the customer paying a "sudden excessive hike".