Direct debit account balance graph puzzling me

Cardew

DragonQ wrote: »

There is?

Yes there is!

Nearly all companies have quarterly billing. however some offer attractive discounts for payment by DD.

The saving in interest for customers, when paying quarterly, is a fraction of 1%. It can be 6% or more for those paying by DD.


Yeah they just have some customers "subsidising" others. But if it still works out cheaper overall then that's fine with me. If it worked out even cheaper to pay by direct debit, I would, but they choose not to offer that so fair enough.

?? Ebico do allow payment by Direct Debit. Are you saying that you personally can't pay by DD?

Fire_Fox

bye_bye_band_G wrote: »

Can someone with a clear head help me here? EDF have just completed my DD annual review and say that my account balance should be zero at the time of review. Bearing in mind this is the end of the winter, I said that if my balance is zero now, this means I must be in credit throughout the 12 months of the year. ie I start to build up credit at this time of year, then use it all during the winter months, finally ending up at zero this time next year.
Now EDF have a graph they draw on their bills of a typical DD balance curve, and it shows the winter months in debit and the summer months in credit. So the customer owes them money for half the time, and they owe the customer money for the other half, which is fair.
Am I right in thinking that an annual review in the spring, with zero balance, is very unfavourable to me? And, if my annual review was in the autumn, with a zero balance then, that I would actually be in debit for the rest of the 12 months?
The EDF lady and I were on the phone for ever and a day, with me saying I would be in credit all year, and her saying I would only be in credit for half the year, as it should be. We had to agree to differ.
If someone clever can confirm to me that I'm right, I'll be more forceful with my point next time, and insist that I'm not going to be at zero in the Spring, but will calculate it so I'm at zero preferably in the Autumn, but at least in the middle of the Summer, which seems fairer to me.
Thanks!

There are many threads on this if you run an advanced search.

DD is not intended to be financially favourable to the customer or 'fair', it's intended to be convenient or a method of budgeting. If you don't want to be in credit but instead to be in debit then go for a quarterly in arrears paper tariff. Really the discounts you get with online/ DD tariffs make up for the miniscule amount of interest you might lose.

It's not a 'fair' situation anyway, you are far more likely to default on your payments than the supplier is to suddenly cease giving you energy. Realistically there is more risk for them than for customers.

DragonQ

Cardew wrote: »

?? Ebico do allow payment by Direct Debit. Are you saying that you personally can't pay by DD?

No, I mean there is no discount for paying by direct debit so there is no advantage to me to do so (especially as gas used can vary so much year to year depending on how cold the winter is, so the direct debit would probably need changing annually anyway).

As for your comment in red, I'm sorry but I don't see any difference between "you get a discount for paying by direct debit" and "you pay a surcharge if you don't pay by direct debit". They are the same thing, it just depends on what you want to use as a reference. Obviously the companies prefer to use the term "discount" in marketing.

wakeupalarm

Cardew wrote: »

I understand your point about a non-sustainable business model, but it doesn't follow that it will force Ebico to introduce a standing charge.

They can simply increase the unit(kWh) price until it becomes a sustainable business model.

Yes, they could but the problem is that Ebico have a high unit price already compared to other energy companies because they don't charge a standing charge. Increasing this will make them even more uncompetitive for medium and higher users, with the risk that these higher users will leave and Ebico will be left with a higher level of unprofitable low users.

Unlike the big 6 energy companies, Ebico does not have any legacy customers that they inherited. Everyone who is with Ebico actively changed to them, they are not part of the 60% who have never switch energy companies so are more likely to switch away if the unit price because too uncompetitive.

Because of Ebico's higher unit price, the most profitable customers are the higher users, driving them away with even higher unit prices and keeping the low unprofitable customers is just not going to be sustainable.

brewerdave

Fire_Fox wrote: »

There are many threads on this if you run an advanced search.

DD is not intended to be financially favourable to the customer or 'fair', it's intended to be convenient or a method of budgeting. If you don't want to be in credit but instead to be in debit then go for a quarterly in arrears paper tariff. Really the discounts you get with online/ DD tariffs make up for the miniscule amount of interest you might lose.

It's not a 'fair' situation anyway, you are far more likely to default on your payments than the supplier is to suddenly cease giving you energy. Realistically there is more risk for them than for customers.

...but the major change in their DD policy is that they are all moving or have moved to Spring "review" - I've paid by DD for many years to get best price but until ~4 years ago I always moved just before Winter,so I was in debt virtually all year! and the debt only started to reduce ~ April.
The Utility companies were relatively happy with this for years -until some bright spark realised that they could force customers into a positive balance situation virtually all year by using the fuel debt argument put forward by the Government and introducing Spring review/balance!

bye_bye_band_G

I wouldn't mind being in credit all year from the 'loss of interest' point of view. What I don't like about it is when I switch (which, historically, I've done a few times), if you're in credit it always seems to me you have to hassle and hassle to get your money back - at least phone calls to ask where it is, with responses ranging from "it will be with you within eight weeks" (Scottish Power) to "oh, did you want us to refund you your credit balance? We only refund if you ask for it." (npower, the worst energy firm ever). That, to me, is the reason never to let an energy company have a penny more of your money than you need to, and why I'd like to be in debit to them for at least half the year.

justanotherguy_3

This EBICO stuff, they charge the same for DD and what I see you call PPM customers. Same price. So it doesn't matter how you pay.

And DDs, you will be in credit at some point and debt at some point. They don't all have a "fixed" review date, just a couple of them. some suppliers review on the anniversary of you joining, which means the reviews are scattered over the year.