The Issue of Bill Being Overcharged and Undercharged

Gnid

Guys, I seem to now understand that the utility companies overcharge us in the winter and then undercharge us in the summer (or something like that) and then this gets "fixed" and they do an annual meter reading.

To avoid this, can we give me the meter reading each month? I.e. we go to the meter, jot down the meter number and then give this to them (via the internet or phone).

Could this avoid the overcharge and undercharging issue??

Am I getting this all wrong??

Squire_Fulwood

I am becoming a bit concerned about whether or not people fully understand what they are signing up for when they agree to a “Direct Debit” with a utility company. The reason I am concerned is because of the number of people I have explained it to. (I am often asked for help by people that don’t read too well or are just too old to understand new fangled things.)
The older generation have always distrusted direct debit anyway and maybe they should.
The problem I am writing about, though, is that when people sign up for direct debit do they really understand that they have also, in some cases, signed up for a budgeting scheme where the same amount is taken each month whether it needs to be or not. This is the point I have to explain most often. With this scheme sometimes you are ahead and sometimes you are not and there is a once a year reconciliation day (or not) although precisely why they call this budgeting device direct debit is confusing.
I am not writing this to absolve the utility companies because there is much evidence to support the fact that they don’t get it right whatever you call it. I didn’t even have a direct debit arrangement with my old electricity company and they still overestimated bills and looked after lots of my money for me.
One more point. I have a direct debit arrangement with my phone company and each month they take exactly what I owe them without inventing figures so it is not the direct debit component which is doubtful here. Some utilities don’t seem to be able to do this.
The problem is utility companies making up figures out of thin air whether you have a direct debit or not and then making it difficult to get it back.

Gnid

So squire, are you suggesting that what we can do what I said in the previous post?

dc

The only way to be sure of not being overcharged is to pay Quarterly in arrears.

That too is open to abuse by some companies, who estimate useage at price changes with a bias in their favour. To reduce the chance of them doing this is to supply your own meter readings at the price change date and just before the next bill date. ( either by web or phone ).

Utility companies have never really been hi-tech with billing, competition and complaints should improve this in time.

DD payment may be cheaper in the short term and easier for a lot of people, but this makes them easy prey for the unscrupulous.

You should check your bills as if they were from a Credit Card company.

Squire_Fulwood

Certainly everyone should read their meter each month although if you have signed up for budgeting you may find that the utility company may not use it unless it is the reconciliation reading which they only use once a year.
Giving them meter readings works better if you just pay your bill every month without the direct debit/budgeting complication.
The real point about my post was, though, that we all discuss the benefits or not of direct debit when the real problem is nothing to do with direct debit per se. It's just that the utility companies do not take readings, overestimate consumption and don't answer the phone whatever type of billing arrangement you have.

Gnid

presumably, when you say budgeting scheme, this is the direct debit scheme in place or some other auto payment scheme?

I don't really understand why the utility companies don't take our meter reading to estimate and only use their annual own meter reading. If we take a meter reading per month, it will give a general flow of people's usage and this should be good for estimation even for direct debit. The annual meter reading can be used as a check that the person is giving info correctly.

If we give regular meter readings, this will then work similar to credit cards or phones (albeit maybe a few days estimation and overcharging) - at least it avoid all the major overcharging and undercharging and utility staff can be used in more productive areas then dealing with the utility companies inefficiencies...

can the utility companies move into 21st century please??

Squire_Fulwood

Direct debit is an order to your bank to let the supplier dib into your bank account. Budgeting is the the thing where you pay the same amount periodically and sort out the overs and unders at the end of the year. The point about budgeting is it takes a projected annual usage and divides it by 12 (or 4 if quarterly) and this is not fiddled with mid year even if readings are offered. No-one bothers because you have agreed to let them reconcile your account just once a year.

If they got the projection wrong then they adjust the periodic payments for the following year. I know of no-one who ever ended up owing the company, it is often or always the other way round.

If you have not signed up for budgeting and you get an old fashioned bill then the ball is in your court since you have not paid them any money yet. You can then read you meter to them and get an adjusted bill issued. You have more power since the money to pay the bill is still in your account.

tripled

Squire_Fulwood wrote: »

If they got the projection wrong then they adjust the periodic payments for the following year. I know of no-one who ever ended up owing the company, it is often or always the other way round.

I guess you've never read any of the posts on here complaining a utility co or other wants to put someones dd up by x amount more than they can afford due to undercharging (for various reasons).

Yes, there are instances where companies overcharge but they can undercharge too. I would suggest ensuring your company gets a reading every quarter (regardless of whether you are on a dd or not) and check your bills carefully as mentioned above. Whilst generally speaking companies only reassess once a year, if you can demonstrate a large discrepancy between usuage and that being paid they will usually do an iterim reassessment for you. However no company will do a monthly reassessment, the idea of a dd is to save administration costs and reduce the risk of bad debt, if you are constantly calling them then the administration saving goes out the window!

Also there are companies which will do a quarterly direct debit, however you may not get the £80 rebate or 10% or whetever your company gives you.

The reason monthly dd is so heavily promoted by the companies is:

1) Reduced administration costs
2) Reduced risk of bad debt, ie a low monthly amount taken on a day the customer is expecting is less likely to bounce/be paid late than those on quarterly direct debit/cash cheque. Also the utility can reapply for a payment if it isn't received.
3) Increased loyalty - people on a monthly direct debit are known to be less likely to switch, probably as they don't notice the bills so much.

Squire_Fulwood

You are correct, I never read the posts you mention since I only joined yesterday.
I was not going deeply into why companies have the policies that they do, I was trying to clarify the situation for Gnid who was asking questions.
In the overcharging/undercharging argument I find that people tend to complain when they think that someone else has some of their money which indicates even more strongly to me that they are not clear what budgeting means.
They may also complain when they have to pay more after a reassessment which tends to suggest the same.
I am of the opinion that a better understanding of budgeting would lead to fewer complaints but some people are not clear what they have signed up for when they sign a direct debit mandate.

Gnid

Thanks for all your clarifications guys

But direct debit doesn't automatically mean budgeting right?? You are only budgeting if you agreed to some standard payment plan right?

When you join monthly plan phones and credit cards, you can choose direct debit and that is not budgeting - you get charge for what you pay.

If we get regular meter readings (if you are paying quarter direct debit, get quarterly readings, if you are paying monthly, get monthly readings, etc), then it shouldn't take a whole year to reconcile the amounts (that really doesn't make sense)...it should take a quarter or a month?

If we use direct debit, gave regular meter readings, reject budgeting agreemnets - this should take out the woolly estimation stuff and there should minimal overcharge and undercharge issues - correct?

Sorry I have no background with utility companies and payments - am trying to understand how this works in England - sorry if it seems I am like a complete newbie..

Squire_Fulwood

You are correct. Direct debit should not mean budgeting although some people sign up for both when they think they are signing up for direct debit.

Your second point is correct if I read you right. Credit cards let you pay any amount above a certain low limit, you will get charged for borrowing the money. Personally I am not aware of a monthly plan operating on credit cards but I am not an expert so there may be such a plan somewhere. Phone companies just take what you owe.

You have to understand that the point of budgeting is to average out your annual bill over 12 (or so) payments. What is the point of fiddling with it once you have agreed to this procedure. Really gross mistakes can be investigated but there is no point in re-assessing everyone every month once a forcast has been made. Wait until the year ends and see how wrong it was. People usually only complain about this during the summer months when they are likely to think that they are paying too much.

Yes of course. If they actually read the meters and charged you for what you used there would be no cause for complaint. The problem is that the companies do none of this. They don't even answer their phones if the TV reports are to be believed.

Don't apologise. I try to explain this to many people who have always lived in England and they have trouble understanding.