EDF direct debit manipulation

backfoot

snowcat53 wrote: »

Just catching up.

Backfoot- I would be delighted to get from EDF something as clear and sensible as you have had from SP. It really should not be too hard for them should it?

Absolutely not. I recall the SP layout has been used by Suppliers for many years. It is only recently, especially with EDF, that such information has become secret..... :rotfl:

You have to conclude that they don't trust their own output because it wouldn't pass the reasonability tests I applied and other posters question, if you want more depth.

All along this has been a no brainer issue and somehow EDF and the complicit Energy Ombudsman have complicated it.

steve-L

backfoot wrote: »

Absolutely not. I recall the SP layout has been used by Suppliers for many years. It is only recently, especially with EDF, that such information has become secret..... :rotfl:

You have to conclude that they don't trust their own output because it wouldn't pass the reasonability tests I applied and other posters question, if you want more depth.

All along this has been a no brainer issue and somehow EDF and the complicit Energy Ombudsman have complicated it.

Doesn't it bother anyone else that the example of a 'good' calculation doesn't actually say at how they arrived at your yearly estimate of consumption?

Surely it's obvious that if you are paying by DD for a smoothed energy bill across the year you should pay more than someone who will pay as they use?

Since the tariffs are what they are and we get given an incentive to pay by DD then they will make money off you elsewhere by over-estimating your use to cover against people who join the 'savings scheme' in winter? (i.e. people who are borrowing money at zero % from the utilities)....

backfoot

steve-L wrote: »

Doesn't it bother anyone else that the example of a 'good' calculation doesn't actually say at how they arrived at your yearly estimate of consumption?

Surely it's obvious that if you are paying by DD for a smoothed energy bill across the year you should pay more than someone who will pay as they use?

Since the tariffs are what they are and we get given an incentive to pay by DD then they will make money off you elsewhere by over-estimating your use to cover against people who join the 'savings scheme' in winter? (i.e. people who are borrowing money at zero % from the utilities)....

I would expect them to respond to a specific question about it but not produce that much detail as a matter of course. The starting point for me is the Kwh assumptions, which EDF completely fail to provide along with everything else.

No it's not obvious to me that they should overestimate. To do so would breach the SLC.

DD's are offered because they represent a considerable saving to the Supplier in terms of minimal debt follow up actions and smooth cash flow over the year.

jalexa

steve-L wrote: »

Doesn't it bother anyone else that the example of a 'good' calculation doesn't actually say at how they arrived at your yearly estimate of consumption?

As it happens, the "projected consumption" is about the only variable which cannot be proved as a matter of fact, so yes it is indeed a concern if suppliers do not substantiate its provenance. In this case however the poster is satisfied with its accuracy otherwise I imagine a follow-up question would be forthcoming.

Regarding the reappearance of your "DD allows them to bill what they want..." argument which I believe is founded on an Edf T&C misconception, there are several Regulations that I expect would have precedence if ever judicially tested.

snowcat53

steve-L wrote: »

Surely it's obvious that if you are paying by DD for a smoothed energy bill across the year you should pay more than someone who will pay as they use?

..

No it is not obvious to me and I don't think it's true either.

Most of us are very happy with the idea of a regular DD and have experience that it can work well. This thread is about the setting of unjustifiied high figures.by EDF (and others) and the calculations and if they comply with the SLCs.

victor2

backfoot wrote: »

DD's are offered because they represent a considerable saving to the Supplier in terms of minimal debt follow up actions and smooth cash flow over the year.

Best sentence I've seen in a long while describing why suppliers offer it. For customers who also want smooth cash flow over the year, it makes it a win-win situation.
The problem as it now exists has only arisen because the suppliers are trying to maximise their profits by manipulating the calculation of the amount required from the customer. Can't blame them for trying I suppose, but they should back down gracefully and admit they were wrong.

WestonDave

In general if you pay be DD and its set up right you pay for your energy use before you use it, whereas paying on receipt of bill means you pay after it.

Most energy companies will set up DD's so that by the end of winter your account is at zero - so you pay more over the summer than you use, build up a credit balance with the supplier which is then used a bit at a time each winter month to cover the fact that you are now paying less than you use. It should be cheaper on DD because this money is paid up front whereas with credit billing, firstly its paid up to 30 days after the bill is issued, and the bill itself probably covers 3 months so you are paying for energy used up to 4 months ago. the discount on DD is for the cost of capital saved by not having outstanding credit and for the lower risk of non payment because they already have the money.

To give a simplistic example - suppose you use £50 worth of energy from April to September, £100 from October to March and start your new contract 1st April. Its pretty clear that the supplier should set up a DD for £75 per month so that by next 31 March its all in balance - that is what people expect and are happy to agree with. What it means is that by 1st October you've used £300 worth of energy (6 x£50) but paid £450 (6x£75) leaving you having paid £150 up front. That balance then reduces by £25 per month to make up the difference between use and payments. Now its never as simple as that so suppliers tend to err a bit on the side of caution, allow for price increases etc so might set the DD at £80 per month to be safe. Again no-one is really objecting to that provided that as its reviewed the extra gets paid back.

The problem with EDF is that their methodolgy is taking a scenario like the simple one above, applying some random factor to expected consumption - in my case a 40% increase - and then working out the DD's on that so someone on the figures above would end up paying £105 per month rather than £75 with EDF sitting on the extra cash until the review date when it becomes obvious that there is £360 too much.

Even then if they could turn around and say that for example in my case my last 12 months usage was in a year when there were say X heating days (a term used on imeasure.org so not sure how universal it is but it tries to indicate from weather records of external temperatures how much heating should be being used compared to other cooler or warmer days) where X is only 70% of the normal heating days required and so they've uplifted that anomalous record to a normal record, I suspect we'd at least start to understand and could have reasonable grounds to review their predictions and challenge their DD figures and have a sensible debate with them.

What this thread is about is EDF coming up with higher than expected DD figures and not being able to provide any explanation of how they get there. Their staff effectively admit this and are far keener to simply capitulate and lower DD's than justify their figures. The problem is that is that most people will just accept their calculations and pay extra (which causes cash flow problems for those less well off) but where people insist on getting their DD's put back down, it could be building up debts if the DD was actually too low and EDF simply can't back that up.

snowcat53

WestonDave wrote: »

To give a simplistic example - suppose you use £50 worth of energy from April to September, £100 from October to March and start your new contract 1st April. Its pretty clear that the supplier should set up a DD for £75 per month so that by next 31 March its all in balance - that is what people expect and are happy to agree with. What it means is that by 1st October you've used £300 worth of energy (6 x£50) but paid £450 (6x£75) leaving you having paid £150 up front. .

Thanks for replying so comprehensively.

Just to modify the above for those of us with contract start around dec/jan. but same usage. The DD is still 75 but balnaces will be

in debit by 75 at march
zero balance at june
in credit by 75 at sept,
zero balance at dec

jalexa

WestonDave wrote: »

Now its never as simple as that so suppliers tend to err a bit on the side of caution, allow for price increases etc so might set the DD at £80 per month to be safe. Again no-one is really objecting to that provided that as its reviewed the extra gets paid back.

Ah, that explains it then.:D

I don't disagree with your calculation logic but I for one object to "err a bit on the side of caution", partly because I'm 'spring aligned' and therefore continually in credit (per your analysis). With the frequency of 'interim reviews' specified either in the suppliers DD scheme information or sometimes differently in the Ofgem DD guidance note (October 2012 revision) there is really no need for "caution". What is needed is accurate and transparent payment management.

SLC27.15 is potentially relevant. Frankly I cannot make sense of its contradictions. For example "...the fixed amount of the regular direct debit payment...", then "...best and most current information available..." and "...including information as to the quantity of gas which the licensee reasonably estimates has been or will be supplied...".

I have just had a payment review which hiked the gas component by 43% on the basis of a single month's comparison with a single month 12 months ago. Is that application of "best and most current"? "Reasonable"? Not yet received the requested explanation but my payment profile fully complies with your worked example so not a "fixed amount" then.

In passing I just noticed that in the Ofgem leaflet the Edf £150 automatic refund trigger at 'review' is actually £150 per fuel.:eek:

steve-L

WestonDave wrote: »

In general if you pay be DD and its set up right you pay for your energy use before you use it, whereas paying on receipt of bill means you pay after it.

Most energy companies will set up DD's so that by the end of winter your account is at zero - so you pay more over the summer than you use, build up a credit balance with the supplier which is then used a bit at a time each winter month to cover the fact that you are now paying less than you use. It should be cheaper on DD because this money is paid up front whereas with credit billing, firstly its paid up to 30 days after the bill is issued, and the bill itself probably covers 3 months so you are paying for energy used up to 4 months ago. the discount on DD is for the cost of capital saved by not having outstanding credit and for the lower risk of non payment because they already have the money.

To give a simplistic example - suppose you use £50 worth of energy from April to September, £100 from October to March and start your new contract 1st April. Its pretty clear that the supplier should set up a DD for £75 per month so that by next 31 March its all in balance - that is what people expect and are happy to agree with. What it means is that by 1st October you've used £300 worth of energy (6 x£50) but paid £450 (6x£75) leaving you having paid £150 up front. That balance then reduces by £25 per month to make up the difference between use and payments. Now its never as simple as that so suppliers tend to err a bit on the side of caution, allow for price increases etc so might set the DD at £80 per month to be safe. Again no-one is really objecting to that provided that as its reviewed the extra gets paid back.

No other factors considered then 50% of new tariff customers start their DD in the winter months not April... however there is probably some bias with people deciding to go onto this tariff because it October. Hence they are overestimating by A LOT to make sure they are positive overall....

The problem with EDF is that their methodolgy is taking a scenario like the simple one above, applying some random factor to expected consumption - in my case a 40% increase - and then working out the DD's on that so someone on the figures above would end up paying £105 per month rather than £75 with EDF sitting on the extra cash until the review date when it becomes obvious that there is £360 too much.

This is exactly my point.....
Unless people don't actually have a known tariff the 'calculation' people are asking for is something an 11 year old should be able to do IF they start from a known consumption. Certainly it's something the energy companies should be able to do and is easily checkable. Except .....

Even then if they could turn around and say that for example in my case my last 12 months usage was in a year when there were say X heating days (a term used on imeasure.org so not sure how universal it is but it tries to indicate from weather records of external temperatures how much heating should be being used compared to other cooler or warmer days) where X is only 70% of the normal heating days required and so they've uplifted that anomalous record to a normal record, I suspect we'd at least start to understand and could have reasonable grounds to review their predictions and challenge their DD figures and have a sensible debate with them.

So this is the whole point, if you have X heating days and kWh cost per heating day what you REALLY need to know to see what the DD amount is based on is X and Y....

What this thread is about is EDF coming up with higher than expected DD figures and not being able to provide any explanation of how they get there. Their staff effectively admit this and are far keener to simply capitulate and lower DD's than justify their figures. The problem is that is that most people will just accept their calculations and pay extra (which causes cash flow problems for those less well off) but where people insist on getting their DD's put back down, it could be building up debts if the DD was actually too low and EDF simply can't back that up.

OK.... so that's my point .....
Forget the DD for the moment... EDF are predicting your energy consumption for a year based on some secret formula. It doesn't matter how you pay at this point other than the DD tariffs are based on PREDICTED use.

EDF are over estimating in order to 'cover themselves' against both non-payment later and in the case they subsidised someone who joined in November the fact they lent money over winter.

There are only 2 sets of unknowns if you have the tariff.
1) How do they calculate your predicted energy use
2) How do they split that over 1 year

The way they split it you could argue is up to them.... because you have chosen to have them manage your cash-flow for you. In that is it 6x£50 and £6x100 or 3x£50 then 3x£75 then 3x£100 and another 3x£75 ???? So long as they say HOW this is split...

However the way they calculate your total estimated use is the basis for everything. This is the part I don't see any energy supplier actually doing???

Back to DD
So the problem is that you are paying by DD and they can just alter it.... Once they do then the calculation they made on predicted is possibly lost? They want to over compensate not under.... (well they are a business)... and it costs more to borrow money than you get if you put it in a bank.....

Fundamentally, unless they tell you how they calculated your expected use then you have missed the biggest part in the calculation.
This effectively stops consumers from controlling their own energy use... as its not reflected in the estimated use.

Lets say for example I'ma new customer, what do they base this on? Lets imagine they 'play safe' then new customers will be over billed.

Another example, lets say after last year I have paid for double glazing and insulation or switched out tungsten filament for low energy bulbs or the kids moved out or.... How is this reflected?

This list is endless, I might have switched to a gas boiler from electric storage heaters... had a new more efficient boiler .... decided to only heat 1 room ....

Unless you know HOW they calculated predicted energy consumption then this is still reflected in the DD.

Theoretically they might as well use:
Last years Cost in £ x % increase in utility x 5% to cover further costs as the calculation. It doesn't even need to link back to actual kWh at all...????

Unless you know their way of calculating predicted energy consumption the rest of the calculation is pretty meaningless unless you have your own records and are 'happy its close'.