Sharp increase in DD

mrjonep

Hi,

Being a member of the energy club, I switched my supplier last October to British Gas. It all went smooth and I started paying £64 per month, the rate BG set for me. Then, a couple of weeks ago, I received an email to tell me my latest bill was available to view and, by the way, your DD is now going up to £108 per month, a 68% increase!

I checked my account and, according to BG, I'm using the amount of energy they expected me to use. If that is the case, why did they start me on such a low monthly DD payment knowing it was wrong. After all, this doesn't help me when I'm trying to organise my bills and work out how much I need to put to one side for the next 12 months.

I would be interested to find out if anyone else has had this happen, as I wonder if the monthly DD was set very low to make it look really good and give people a false sense of security.

JJ_Egan

The £64 DD is not a rate its an estimate .
You have used more so DD rises .
Thats a fairly typical post .

The initial DD is usually set on the data you enter and not some trap to entice you in .Key is always unit cost and standing charges .

Are you entering meter readings frequently have you checked your bills against your usage ??Check for estimated readings .

System

The sums go like this:

One Year contract from October 17. Review after 6 months with the aim of achieving a zero balance in October 17.

Initial annual cost estimate: £768 or £64 per month. BG now estimates that you will actually use an extra £264s worth of energy in the current 12 month period: hence the £44 increase.

In truth, you have used only 34% more energy than was initially projected during the contract period.

As stated above, unless my calculations are based on the frequent energy readings that you have been giving to BG, then they are meaningless. The 'good news' is that you will only pay for the energy that you use irrespective of the amount claimed by DD. These are only payments made on account.

wavelets

mrjonep wrote: »

Hi,

Being a member of the energy club, I switched my supplier last October to British Gas. It all went smooth and I started paying £64 per month, the rate BG set for me. Then, a couple of weeks ago, I received an email to tell me my latest bill was available to view and, by the way, your DD is now going up to £108 per month, a 68% increase!

I checked my account and, according to BG, I'm using the amount of energy they expected me to use. If that is the case, why did they start me on such a low monthly DD payment knowing it was wrong. After all, this doesn't help me when I'm trying to organise my bills and work out how much I need to put to one side for the next 12 months.

I would be interested to find out if anyone else has had this happen, as I wonder if the monthly DD was set very low to make it look really good and give people a false sense of security.

Where's footyguy? He's usually first to post a link to this useful MSE article for those in your situation
http://www.moneysavingexpert.com/utilities/lower-energy-direct-debits

BG would have set the monthly fee based on 1/12th of the annual cost based on the anticipated annual usage figure you originally provided
(Only if you did not provide one, would any estimation be involved)

phillw

mrjonep wrote: »

I checked my account and, according to BG, I'm using the amount of energy they expected me to use.

Do you mean that they charged you for energy and after applying the DD already taken, you were left with a zero balance?

wavelets

I should also add, if you are using significantly more energy than was first envisaged, beit 34% or 68% more (or whatever), then don't forget to update your CEC account accordingly, as there may well be a better supplier/tariff for you.

Afterall, the best supplier/tariff for you depends on how much you consume (and the supply region)

matelodave

The worst time of the year to take out a new contract is October through to January as you'll be using most of your energy in those months and your DD is unlikely to cover your consumption during this period so You will rapidy ramp up some arrears.

However the energy companies seem to panic at that point and want you to increase the DD just as you are entering the summer months when your energy consumption will drop. So, if your annual estimate was fairly accurate, come the anniversary you'll end up being in credit by a fair amount.

If you know that you are on target then requset them to reduce the DD back to it's original level but make sure that you monitor your consumption to make sure that your arrears do actually reduce towards zero by October.

I had the situation with Scottish Power a few years ago, my DD went up and down like a yo-yo as they had no idea of my energy profile and were always behind the curve anyway.

I'm expecting the same with SSE as I signed up with them in December and I'm now about £150 in debit but on target to be about £30 in credit come next December if they don't muck around with the DD and it doesn't snow too much in June.

I've got seven years worth of monthy consumption readings so I know roughly what I'll be using every month and can monitor my DD and arrears/credits to make sure that it's all under control.

mrjonep

Thank you for your replies, you all make valid points.

I did think the £64 DD was low as I was expecting to pay in the region £80 - £85, it just would have been nice to have had a more consistent figure that didn't change too much. After all, I will have provided annual consumption figures based on what I used last year (though I do realise this is not what I will necessarily use this year).

When I said I'm using the amount of energy BG expected me to use, my account shows that BG themselves forecast me to use £287 of gas and £236 of electric up to this point, where I have actually used £260 of gas and £234 of electric. It's a pity, as this is their own forecast and proved to be quite accurate, that they didn't set the DD on these amounts.

The reason I created the post in the first place, was to find out if anyone else has had a significant rise in the DD they pay, or am I the exception.

phillw

mrjonep wrote: »

I did think the £64 DD was low as I was expecting to pay in the region £80 - £85, it just would have been nice to have had a more consistent figure that didn't change too much. After all, I will have provided annual consumption figures based on what I used last year (though I do realise this is not what I will necessarily use this year).

My DD was set a little low to start with as well, I suspect they have been told off about having large credit balances so often that they do it on purpose.

I include utility balances on my monthly balance sheet to mitigate the effect. Getting a 0% loan without having to apply for it is surely something to be grateful for.

teddysmum

If you notice a large credit build up or think you are falling behind, you can call your supplier and ask for the payments to be altered, instead of waiting for a review. (I've done this a number of times.)

phillw

teddysmum wrote: »

If you notice a large credit build up or think you are falling behind, you can call your supplier and ask for the payments to be altered, instead of waiting for a review. (I've done this a number of times.)

If you provide monthly reading and they bill you monthly then this is easy. Some only do quarterly billing and npower didn't bill me for an entire year.

I'm more worried about the DD being set too high, as I don't like lending money at 0%.