British Gas can't lower direct debits - is this true??

jonnyw_2

Cardew wrote: »

To be fair to all the Utility companies, according to the Regulator they are owed more money than the owe from the DD scheme i.e. debit balances are greater than credit balances across their customer base. QUOTE]

Of course the figures for credit balances are not actual credit balances but balances on the accounting records of the utility company which are primarily based on estimates. It also depends whether you look at a disparity in winter or summer.

If I were an unscrupulous individual with a utility company this is what i would do

1 Induce new customers by saying that their direct debit would be a few pounds lower than their current supplier and rely on their own missunderstanding of the relationship between the direct debit and the debt to make a profit

2 Always slightly overestimate useage by customers who may be on a bad credit rating on the basis that its better for them to pay too much than be chasing them for arrears

3 With good credit rating customers i would underestimate when prices are rising, so the catch up on the actual bill every few years is in the supplier's favour and overestimate when prices are falling, which again benefits the supplier.

Even if I got caught out by a small percentage of customers on playing these tricks, the worst that would happen is that I would be back in the position I would have been in if I had sent a correct bill in the first place.
All of these tricks arise because the whole system relies on estimates not actual figures.
The only time i would make the odd token gesture towards proper billing is if I was being investigated.

Cardew

elektra wrote: »

On the 2 occasions I checked this (BG) I was actually quite surprised how close they were to actual readings ( maybe only a unit out).

Agreed. For people, like myself, with a regular pattern of consumption the estimates are normally pretty accurate.

I read somewhere that all of the companies have a sophisticated algorithm to calculate estimated readings, this takes into account factors such as weather etc, but the main determinate is past usage.

Much as it is tempting to think that companies would ‘fudge’ this algorithm in their favour, IMO they wouldn’t dare as it would be fraud. It would be impossible to get away with this in the long term, as a pattern would emerge and/or a disgruntled employee would ‘blow the whistle.’ The Regulator would absolutely hammer them. Remember what happened when Severn Trent did a bit of ‘creative accounting’ – they got fined £Millions and had to pay back all their customers, even though it was a couple of pounds each.

jonnyw_2

Cardew wrote: »

Agreed. For people, like myself, with a regular pattern of consumption the estimates are normally pretty accurate.

I read somewhere that all of the companies have a sophisticated algorithm to calculate estimated readings, this takes into account factors such as weather etc, but the main determinate is past usage.

Much as it is tempting to think that companies would ‘fudge’ this algorithm in their favour, IMO they wouldn’t dare as it would be fraud. It would be impossible to get away with this in the long term, as a pattern would emerge and/or a disgruntled employee would ‘blow the whistle.’ The Regulator would absolutely hammer them. Remember what happened when Severn Trent did a bit of ‘creative accounting’ – they got fined £Millions and had to pay back all their customers, even though it was a couple of pounds each.

It didnt stop United Utilities doing something very similar when they fudged the expenses on their non regulated work to justify putting water charges up. And they did it and continued doing it year after year even when they got warnings about it from their regulator.

Who got prosecuted for fraud - no one, they just got a little fine I think it was £8.5 million as against their profits of £450 odd million for the year in question.

No one got prosecuted for fraud at Seven Trent either. They still posted a healthy profirt for the year despite the fine.

Of course they would dare do it. They just say if they are caught that these problems existed in the past but management is actively adressing the issue and get away with it EVEN IF they get caught.

It may be morally the equivalent of fiddling a benefits claim, but quoted companies management arent treated the same because of the principal of deniability.

Just look at the number of people who change supplier because they are told the direct debit will be a lower figure. You may see it as adjustment when the company becomes aware of actual useage but I dont. They know exactly what they are doing from the outset and why.

Cardew

jonnyw,
And I thought I was cynical;)

You are undoubtedly correct about them fixing the DD initially at an unrealistically low level to lure customers. The problem, if this Board is any indication, is many people do not understand the DD system. There are scores of posts starting "I moved to xxx Company and they said all I would have to pay is £yy - now they want to double it and they say I owe them hundreds of pounds"

My gut feeling is that the Utility companies do not profit from estimates. This is not because of any high principle, but fear of recriminations if found out.

I accept however I might be wrong, and you correct.

rachh_2

Like many on here, I have had to phone and complain that they put my direct debits up even when I was loads in credit! They told me they worked out what I should be paying from my usage the previous year. I told them that was very clever as I wasn't with them the previous year - they soon put the direct debits back to how they were.

Anyway, my point is GET RID! I have just signed up via EnergySwitch to EDF Online 5 which is apparently going to save me £158 this year! I rang British Gas for their unit prices and on BGs standard tariff they are consistently quite a bit higher than EDF. Oh and I will get nectar points too!

My advice is to move from the jokers. I only moved when they went cheaper and froze the price but then when that ran out, I didn't think to check until now (about a month later). I guess that is what they bargain on - laziness! Anyway thanks to the MSE email this morning I have switched - and bagged myself £15 from EnergySwitch in the process.:rotfl:

Once again - Thanks MSE - we luv ya!

Cardew

rachh wrote: »

Anyway, my point is GET RID! I have just signed up via EnergySwitch to EDF Online 5 which is apparently going to save me £158 this year! I rang British Gas for their unit prices and on BGs standard tariff they are consistently quite a bit higher than EDF. Oh and I will get nectar points too!

You can't compare EDF on line with BG's standard tariff, anymore than you can compare BG's on line tariff with EDF Standard tariff.

Anyone who stays on BG's Standard Tariff doesn't understand Utility prices, is silly, or lazy as you put it..

BG have an on line tariff called Click Energy 2 which for most people is cheaper than EDF on line. See http://forums.moneysavingexpert.com/showthread.html?t=454166

Apparently 900,000 people have switched back to BG recently because they are cheaper - certainly not for their customer service.

May I suggest it would have been more helpful if you had done a little research first before offering firm advice.

mprice1988

jonnyw wrote: »

Wouldnt life be easier if the meter was read every quarter and you got a bill and paid it!!!!!!!!!

Working for another energy company, SSE, your quote is a statement which i'm faced with everyday. It would be nice for your meter to get read every quarter.


But (and i hate to stick up for British Gas in any form because their a waste of space) having about 12 million customers British Gas would have to arrange 48 million appointments a year to read customers meters. Then you have to take into consideration, missed appointments. So lets say about 50 million appointments works out about 900,000 a month. Imagine the logistics in that.

jonnyw_2

mprice1988 wrote: »

Working for another energy company, SSE, your quote is a statement which i'm faced with everyday. It would be nice for your meter to get read every quarter.


But (and i hate to stick up for British Gas in any form because their a waste of space) having about 12 million customers British Gas would have to arrange 48 million appointments a year to read customers meters. Then you have to take into consideration, missed appointments. So lets say about 50 million appointments works out about 900,000 a month. Imagine the logistics in that.

Most meters are outside nowadays, particularly on houses built in the last 20 years. With their market share every fourth house on a road is one of theirs.

If they employed their own meter reders I would estimate 5 minutes a house that would be less than a pound a house in wages, £10 million a year to read once a year, £40 million to read once a quarter.

On the other side they would have saved the cost of their new "state of the art computer" system which I think cost £100 millon and could sack at least half the call center staff which I believe total 6000, because they would have a fraction of the complaints. 6000 x £10000 a year (say)= another £60 million a year saved. The call centre staff wouldnt be needed because most of their time is spent on queries which would dissapear if bills were actual and up to date.

So they would be well in front on honest actual billing.

Any rational person would go this way UNLESS (which is my theory) the estimating system is a scam that makes them more money in the long run.

I think its acknowledged that utility companies commit fraud to win new customers (by misleading them into believing there is a monthly saving). Is it such a big step to accept they continue with their fraudulent system after they have gained a new customer

tripled

jonnyw, I don't think BG brought in a new computer system just to estimate bills more accurately, and the cost of the new system is just a bit higher than you quoted (try about 8 times higher).

Believe it or not most people with outside meters have them read around three times a year. The principal exceptions are on new developments and rural areas.

mprice1988

jonnyw wrote: »

Wouldnt life be easier if the meter was read every quarter and you got a bill and paid it!!!!!!!!!

Working for another energy company, SSE, your quote is a statement which i'm faced with everyday. It would be nice for your meter to get read every quarter.


But (and i hate to stick up for British Gas in any form because their a waste of space) having about 12 million customers British Gas would have to arrange 48 million appointments a year to read customers meters. Then you have to take into consideration, missed appointments. So lets say about 50 million appointments works out about 900,000 a month. Imagine the logistics in that.