E.oN Energy Bills - DD Calculations

lvf

I understand the query, about how the calculation for where the increase came from, but what I cannot grasp is how you are so wound up about it.

It's clear that you have only recently joined E.ON, so your usage statistics are going to be minimal, but from reading posts on the thread it is mentioned time and time again that their DD manager online allows you to change your DD by up to 20% in either direction with up to date reads.

Now you have an idea the £73 is too much, and you are allowed to go down 20%, and 20% of £73 off the top of my head is £14.60(?), so say down £14 to £59 per month.

Is that what's bothering you, the extra 50p per month?

If you are upset this much over an issue which you know you can rectify yourself but apparently choose not to out of 'principle', then no supplier will ever satisfy your needs.

System

@Ivf -I agree - it is time to move on in more ways than one.

LewisHamilton

Hengus, you are looking into this far too deeply.

The direct debit payment, your consumption and the appliances in your property change year on year and are never fixed. The projection will never be perfect. I'd rather overpay and end up with a credit balance, than underpay and end up with an outstanding balance because I think my logic is superior to the energy company.

System

LewisHamilton wrote: »

Hengus, you are looking into this far too deeply.

.

Absolutely, because this site states:

After years of persistent complaints (see Martin's blog: Is Ofgem listening?), the regulator finally stepped in and introduced new licence conditions setting out guidelines for fair and reasonable direct debits.

Under condition 27 of the Gas Supply Licence, suppliers must:

Set fair direct debits. They must take reasonable steps to ensure customers' direct debit levels are based on the best available information, including the quantity of gas and electricity supplied.

Give clear explanations. If you ask, your supplier must clearly explain why it's chosen that amount for its direct debit.

So far., E.oN is failing on both counts.

Former_E.ON_Company_Representative:_Malc

Hengus wrote: »

You haven’t actually explained though how past usage figures are calculated (which I assume are used as the basis for an increased monthly DD)? That said, I am grateful that you agree that your colleague’s formal response was flawed.

Hi Hengus

Sorry if I’ve not fully explained. Past usage is worked out using the previous 12 months readings. Customers who let us have regular monthly readings will have the most accurate forecasts but this can never be an exact science. As LewisHamilton says, what happened before may not be repeated going forward as people’s lifestyles vary so much. Even consistent patterns can be thrown out by sudden spikes. This is why we review arrangements quarterly and have introduced the ‘Direct Debit Manager.’ This tool lets customers amend their payments to better reflect changing circumstances. The aim is to stop too much credit/debit building up. If it does, we’ve built in a safeguard to automatically return credit over a fiver or include debt in ongoing payments and spread up to the next review.

This is where I must take issue with you. E.oN’s algorithms which underpin this tool are, in my view, concerning. It is just not possible for E.oN to suggest - based on 4 months of recorded usage - that I will need to increase my monthly payment from £58.50 to £73.00 per month - unless it is actually using the logic as described by your colleague.

I agree, using 4 months recorded usage isn’t the best basis for a yearly calculation. We much prefer to use a full 12 months of readings but they may not be available, particularly where customers have been with us for less than a year. The longer the account is billed to actual readings, the more accurate forecasts will become. With new customers, the distributor will send us the Estimated Annual Consumption (sorry to use jargon) for the property. We’ll use this as the basis of the initial calculation but, again, it won’t be an exact prediction of what will be used in the future or when it will be used. It’ll also be used as part of ongoing reviews until the account has been with us for 12 months or more. A seasonal adjustment may also be made to better reflect winter/summer usage, particularly if there are lengthy periods without readings.

If E.oN has its own set of weighted monthly average consumption percentages to calculate annual usage then perhaps you would share them with us. The difference that we are talking about here is £190 on a £702 annual fixed contract.

As you’ve not been with us long and mainly during the colder weather, I suspect this has caused a bit of a spike in usage and led to the higher suggested payment. Lower usage during the summer will hopefully put things back to what you anticipated when you switched. If usage is as expected and you pay the higher amount, the account may end with a credit balance at the annual review. As above, anything over a fiver will be sent back to your bank. If it turns out you’re using more than expected, the new payments will hopefully cover this and keep the account out of debt.

As I have already stated, E.oN’s Energy Overview tool shows that I will use less electricity in October than in September, so how can E.oN customers have faith in a tool which can make such a basic arithmetical mistake?

The Energy Overview in the Direct Debit Manager shows what we think you’ll use until the next annual review. It uses information taken from your account and looks at the energy you’ve used over the last year so we can predict what we think you’ll use in the future. We also include discounts and any payments you’re about to make as well as your current balance. Together this gives the Energy Overview. The numbers also rely on when the annual review takes place.

Forecasts are only as good as the information they’re based on. To be honest, I can’t say why we’re predicting you’ll use less electricity in September than October. It may be this is what happened last year. It could also be down to the way the Estimated Annual Consumption sent to us by the distributor when you switched was presented. Although this may be accurate for the year there might be fluctuations in the way the details are allocated on a daily/monthly/yearly basis. It’s possible this could give a random variation for the odd month. We do, though, make it clear at the top of the Energy Overview page that this is what we think you’ll use until the annual review. It’s not set in stone and may change to reflect your individual usage pattern.

In an attempt to resolve the matter, I have asked E.oN CS to provide a detailed breakdown of the calculation that underpins the Energy Overview projection. I am not holding my breath.

As you can see, I’m speculating rather a lot. The advisor looking after your enquiry will be able to give a more personalised explanation although this will also be affected by the relatively short time you’ve been with us. As above, the longer you’re with us and the more readings you give, the better our predictions will be.

Before any changes are made, we’ll write about 14 days in advance to let you know. This letter will include a basic explanation of how we’ve arrived at the new figure. There’s also more information about Direct Debits and the Direct Debit Manager, including a short film, on our website under Help and Support.

Hope this puts a bit more flesh on the bones Hengus. As always, let me know if I can help further as happy to do so.

Malc

System

If E.oN doesn't trust its new customers to provide accurate (or in my case, an inflated gas figure for the reasons given) annual energy consumption figures on sign up then it really ought to say so. In the past 3 years, I have switched 4 times (for savings) and provided 3 other companies with the same annual consumption figures and there haven't been any problems - in fact, all 3 of your competitors have suggested DD reductions (albeit, by a few £s per month). My switch away from E.oN is now in progress - primarily, because of very poor customer service from E.on (not from you I hasten to add). I suggest that I bore fellow MSErs no more, and we leave it there. Thanks again for your time and best efforts. Have a good weekend.

GailForce

E.ON_Company_Representative:_Malc wrote: »

Hi Hengus

Past usage is worked out using the previous 12 months readings. Customers who let us have regular monthly readings will have the most accurate forecasts but this can never be an exact science.

Malc

Also Quoted - "[FONT=&quot]Monthly Direct Debits are worked out based on how much energy we think you'll need up to the annual review and current prices. The aim is to have as close as possible to a zero balance by the annual review."

[/FONT] Wouldn’t it be great, if this were actually the case in practice? In my experience this is not what happens.

I have been an E-On customer for several years and in March 2014 I started paying my electricity bill by Monthly Direct Debit to take advantage of the discounts offered. After an initial false start with E-On wanting to set a Direct Debit amount based on overestimated readings, a figure of £38.00 per month was agreed.

Over the following 12 months, in addition to readings taken by the meter reader I provided E-On with regular meter readings. Therefore E-On had a detailed history of my consumption over the year in addition to several years’ previous quarterly consumption figures which on a yearly basis are all pretty consistent. At the end of the annual review I was £6.00 in credit. No complaints.

I was therefore surprised to then receive notification that my Direct Debit would be increasing to £56.00 per month. After a written complaint and several futile telephone calls to E-On I eventually realised that the £56.00 was based solely on my last quarterly bill, which was a winter quarter. This is despite E-On having 15 meter readings for the previous 12 month period.

During a further telephone call an E-On Section Manager eventually conceded that ‘The System’ works out future Direct Debits using only the last quarterly bill. Adding that it was not the way office staff works out Direct Debits, but that is how ‘The System’ does it. Apparently nothing could be done because that was ‘The System.’

A Direct Debit of £56 per month would have resulted in me overpaying by £260 over the next year. At the same time the flawed on-line Direct Debit calculator suggested that I need pay only £26 per month. This would have resulted in an underpayment of £100 over the year.

As my complaint was unresolved after eight weeks I contacted E-On’s pals at the Energy Ombudsman Service, but that proved to be a completely pointless exercise. Apparently as it is a ‘commercial decision’ for E-On to attempt to extract more money from customers than they are entitled, they are unable to investigate my complaint.

Using the on-line facility I have adjusted my Direct Debit to a realistic level, but there does not appear to be any further recourse open to me to formally pursue my complaint. E-On will continue to inflate its own bank balance at the expense of its customers.

The E-On correspondent has described exactly how I would expect E-On to calculate Direct Debits and how the process should work; perhaps he can explain why ‘The System’ only considers the last quarterly bill and not 12 months consumption? No one in Customer Services or the Complaints Resolution Office could explain this to me.

[Deleted User]

Quick post before I head off to bed. I've been pretty hacked off with Eon for various reasons and when I received my quote for the next 12 months, naturally, I shopped around - I'm not moving to the one that would have been the cheapest (too small, and too new to have a track record), so I went for the second cheapest - still with a biggie, but the savings compared to what Eon wanted for the next year was well over £400.

This reminds me of 2 things that I suspect most people know, but don't always pay any attention to, so they merit being restated often -

1) at renewal time, the companies ALL calculate that most folk are reluctant to/can't be @rsed with what they think is the "hassle" of moving away from their present supplier; and

2) how important it is to seriously consider switching every year.

I'll be d@mned if I'm going to pay more to Eon so that they can use my "excess" to fund a discount to attract a new customer - instead, I'll be the new customer being "subsidised" by someone who is too ill-informed (sad, but true) or lazy (no excuse!) to move as well.

The only way that the big companies will offer existing customers the best deal is if a high percentage (65%?) of customers demonstrate that they are happy to switch each year. IIRC I heard somewhere that less than 4 million switches happen a year. (Anyone know the figs?)

I can't believe that the difference between 2 of the big companies charges to me for the next year can be explained by the respective costs to them of gas and electricity.

We have switched many times and I can scarcely believe that there are still those around who won't/don't do it!

Another issue that bothers me about this - I have a feeling that home owners will be more likely to switch than those who rent. (Gut feeling, no stats!) Given high rent levels that folk comment about in other threads, those in long term lets should really look at this.

Night all!

WR

Former_E.ON_Company_Representative:_Malc

GailForce wrote: »

Also Quoted - "[FONT=&quot]Monthly Direct Debits are worked out based on how much energy we think you'll need up to the annual review and current prices. The aim is to have as close as possible to a zero balance by the annual review."

[/FONT] Wouldn’t it be great, if this were actually the case in practice? In my experience this is not what happens.

I have been an E-On customer for several years and in March 2014 I started paying my electricity bill by Monthly Direct Debit to take advantage of the discounts offered. After an initial false start with E-On wanting to set a Direct Debit amount based on overestimated readings, a figure of £38.00 per month was agreed.

Over the following 12 months, in addition to readings taken by the meter reader I provided E-On with regular meter readings. Therefore E-On had a detailed history of my consumption over the year in addition to several years’ previous quarterly consumption figures which on a yearly basis are all pretty consistent. At the end of the annual review I was £6.00 in credit. No complaints.

I was therefore surprised to then receive notification that my Direct Debit would be increasing to £56.00 per month. After a written complaint and several futile telephone calls to E-On I eventually realised that the £56.00 was based solely on my last quarterly bill, which was a winter quarter. This is despite E-On having 15 meter readings for the previous 12 month period.

During a further telephone call an E-On Section Manager eventually conceded that ‘The System’ works out future Direct Debits using only the last quarterly bill. Adding that it was not the way office staff works out Direct Debits, but that is how ‘The System’ does it. Apparently nothing could be done because that was ‘The System.’

A Direct Debit of £56 per month would have resulted in me overpaying by £260 over the next year. At the same time the flawed on-line Direct Debit calculator suggested that I need pay only £26 per month. This would have resulted in an underpayment of £100 over the year.

As my complaint was unresolved after eight weeks I contacted E-On’s pals at the Energy Ombudsman Service, but that proved to be a completely pointless exercise. Apparently as it is a ‘commercial decision’ for E-On to attempt to extract more money from customers than they are entitled, they are unable to investigate my complaint.

Using the on-line facility I have adjusted my Direct Debit to a realistic level, but there does not appear to be any further recourse open to me to formally pursue my complaint. E-On will continue to inflate its own bank balance at the expense of its customers.

The E-On correspondent has described exactly how I would expect E-On to calculate Direct Debits and how the process should work; perhaps he can explain why ‘The System’ only considers the last quarterly bill and not 12 months consumption? No one in Customer Services or the Complaints Resolution Office could explain this to me.

Hi GailForce and welcome to the Forums.

I'm sorry we've caused you so much upset. To be honest, I've no explanation as to why my colleague should make such comments. Nothing's changed in the way we work out Monthly Direct Debits. It's still as I described both in this thread and others. This isn't just me. There's stuff on our website giving similar explanations.

I raised a report last week about a different Direct Debit issue in relation to something another MSE user experienced. I'll add this to it. I suspect a bit of re-education may be needed.

As your usage is very similar to the previous 12 months, my first reaction would be to ask about the unit prices. A change in these would've have triggered the increase although I doubt by the amount suggested. I'm guessing though. The previous 12 months arrangement seems to have worked okay as there was only a £6 credit at the annual review. This is the sort of result we look for.

It's good you're using the Direct Debit Manager to keep control of things. As you probably know, provided the account is billed up to date, you can change the amount by up to 20 per cent up or down. By up to 5 per cent up or down without readings.

We've a special team who look after complaints that've gone to the Ombudsman. As you're not happy with the regulator's response, you can still talk to this team if you wish.

Sorry I'm not able to explain the remarks made by my colleague.

Malc

GailForce

Hello Malc,

Thank you for replying to my post of 21/07/2015.

I estimate that for a full 52 week period my electricity bill would have amounted to £410.00 (excluding two ex-gratia payments amounting to £30.00). At the time of the Annual Review E-On had collected 10 monthly payments of £38.00 and one more payment was due later in March 2015. £32.53 was subsequently refunded, so effectively I was approximately £6.00 in credit at the end of the period.

The notification that my Direct Debit was increasing to £56.00 was based on E-On’s assumption that I was going to consume £705.85 worth of electricity during the next 12 months (an increase of 72%). Neither of these figures appears relate to my last 12 months consumption – or indeed to each other.

My original letter to E-On Customer Services was ignored. The reply to my second letter while helpful did not explain why my Direct Debit had increased to £56.00. I then rang twice for further clarification and received two different explanations, both of which upon closer examination proved to be incorrect.

Subsequently, looking at my last quarterly bill which amounted to £168.14, I realised that if this figure was multiplied by 4 and divided by 12 the result is £56.05. I rang E-On again and proffered how I thought the £56.00 was determined. I was kept on hold while colleagues were consulted and advice was sought from another department. Eventually it was confirmed to me that this was indeed how ‘The System’ calculates Direct Debits, using the most recent quarterly bill. I expressed my concern at this flawed methodology. A few days later I received a letter advising me of the end of E-On’s complaints procedure.

My calculations show how the £56 00 figure could arise and this was confirmed during my telephone conversation, but you are adamant that Direct Debits are not calculated this way. What is clear is that the £56.00 figure was certainly not calculated using my last 12 months meter readings.

I think this saga illustrates not only failings of E-On’s automated billing system but also a lack of commitment by E-On Customer Services staff to fully investigate and resolve my complaint. This should have been resolved within 14 days of my original letter.

I am pleased that you have added my experience to your report. Thank you for your interest.

Gail Force