Scottish Power Picking My Pocket

Brianart

Electricity prices are pretty stable at the moment so I was surprised when Scottish Power increased my direct debit payment by over ten per cent. They gave no specific reason and immediately cancelled the increase when I queried it.

This is not the first time that this has happened and it looks as though the software is programmed to enhance their cash flow rather than charge the correct amount. No doubt many of their customers do not bother to check how much needs to be paid.

Anyone know if they are breaking any laws, regulations or good practice?

CashStrapped

Just to dispel a common misconception.

Direct Debits are not designed to be accurate (to specifically pay your actual bill). For that you "pay on receipt of bill".

Direct Debits are a predicted estimate of what an energy company thinks you will use. They can base this on meter readings, weather pattern, historical use and current balance...and so on.

It is designed to average out your annual predicted spend into 12 monthly payments. So, in summer you overpay (you are not using much energy) and build up a credit on the account. In winter the direct debit will underpay and be too low to cover high winter use. However, with the credit built up in summer, you should have enough energy account savings/surplus to cover winter use.

So if the direct debit system is being used correctly you should go into winter with a surplus/credit on the account. Not a zero balance and certainly not a negative one.

Where it can go wrong is if people request any surplus/credit back from their account just before winter. This can mean they they will not have enough funds to cover winter. As a result the DD has to go up.

This also affects switchers just before winter. They have no pre-existing credit. So the initial DD on the account may be higher than expected to cover winter use.

Furthermore, this is all weather dependant. You cannot compare one year with another. If we get a much colder winter this year, you will use more energy and that results in a DD increase to compensate.

Fluctuations in DD can be mitigated by giving far more meter readings. This gives you and your energy company more data to predict energy use.

They key word is predict. That is what a DD is. A guess as to your next 12 months use divided into 12 monthly payments.

A DD has nothing to do with your actual bill. It is a system designed to "spread the cost" based on your predicted energy use.

csgohan4

it won't matter as long as you give them regular meter readings every month, any over charge will be adjusted same as undercharge.


Your energy prices will increase around this time anyways because it's getting colder, EON have increased my DD by 10 pounds a month.


Whether they increase by 1000 pounds it won't matter, they can only charge what I use.

Brianart

The account is in credit, the existing payment is sufficient to cover the cost of the units used in the last twelve months (SP figures). Why the increase. Why cancel it if it was not necessary?

boliston

I have noticed sp always put up my dd when i submit a reading - the trick is to always go to the "dd manager" and keep reducing the dd amount till you get the message "you will be required to make a one off payment of..." and then set it to one pound more

CashStrapped

Brianart wrote: »

The account is in credit, the existing payment is sufficient to cover the cost of the units used in the last twelve months (SP figures). Why the increase. Why cancel it if it was not necessary?

There could be a myriad of reasons. It would be hard to say without knowing your account and energy use very well.

How much credit do you have on the account? What was your daily/monthly KWH use during winter last year? How many actual meter readings do you give them? Monthly? Quarterly? Yearly? How long have you lived at the property? What is your current daily/monthly use?

I am also with Scottish Power for gas. My account is in largish credit ready for winter. I supply a meter read every month. I know what my usual monthly winter (weather permitted) bill will be. The credit is slowly used up in winter. By spring my account is around a zero balance (as it should be). Scottish power rarely, if ever, mess with my DD. If they do, I just change it back to what I want on-line. If you do it when you submit a reading, you do not even have to send a one-off payment I think.

I do not try to have the DD match my bill. That is not how the DD should be used.

boliston

CashStrapped wrote: »

....

I do not try to have the DD match my bill. That is not how the DD should be used.

If I was doing a monthly read the I would want my DD to match my bill!

If not it either means i am lending SP money or (very unlikely) they are lending me money.

CashStrapped

No, because the direct debit does not dynamically change (although I think one or two firms have this as an option). You would have to manually change each time you gave a reading.

As I said above the DD system is designed to built up a credit for winter.

With interest rates pretty much non-existent, having a credit on the account at the moment is pretty much not worth being concerned about.

I give a reading each month after the DD credits the account. This produces a bill, which is taken off the account and immediately gives a true up-to-date account status.

This enables you to monitor your usage and ensure your DD at the appropriate amount. The more often you give a reading, the more predictable your annual and monthly usage is. Which in turn enables you to set a constant DD for the whole year.

If you want to pay based solely on what you use, you choose pay on receipt of bill!

The DD system, as I said, if used correctly should have a single monthly payment (of roughly the same amount) for a year. This can help people manage money.

In the pay on receipt method, you would have very low summer bills and then may not save enough for winter. At which point you can get hit by much larger winter bills, and get into debt.

The DD system is designed to balance this out over the year.

You only end up pay for what you use. So you are hardly lending money to them, and if you see it that way, it is only for a small portion of the year. It is just a money management system, I do not see the problem if you use the system correctly.

boliston

CashStrapped wrote: »

....

If you want to pay based solely on what you use, you choose pay on receipt of bill!....

I have never seen the option of monthly billing with payment on receipt, only quarterly.

Most people get paid monthly and run a monthly budget so a quarterly bill would put a spanner in the works, a bit like the way councils used to bill 10 monthly instead of 12 monthly.

CashStrapped

Indeed quarterly billing is normally the default way to pay on receipt of bill option.

However, if you manage the account online, many companies automatically produce a bill when you give a meter reading. Whether this only happens for DD customers, I am unsure. Worth a test.

Back to the OPs question. Scottish power are not "pick pocketing". It is how the DD system works, it is not perfect by any means. But it is designed to help spread the costs and have more consistent debits year round. The more you know your annual usage, the more consistent the debits.

matelodave

FU will do variable DD, ie you send in the reading and the DD will be adjusted to pay for the energy used that month, leaving a zero balance.

My consumption in the summer is around £35 a month, in the winter it's been known to get up to £180 when it's really cold however the average over the year is around £62 a month.

I find it a significantly easier to budget for £62 a month - every month rather than have a a random amount between £35 and £180 taken. My income doesn't vary much month on month so a five fold increase in December or January wouldn't be very welcome

I'm about £200 in credit at the moment knowing that by the end of March the account should balance within a couple of pounds. Depending on the weather and my estimates.

I keep my own running total as well as sending in monthly meter readings and checking the online statements to ensure that the DD remains on track to balance at the end of my contract.