Energy Direct Debit Calculation Unfair?

SonOfPearl

Apologies if this has been asked before, but I wanted to ask if someone knows what the regulations are regarding setting of direct debits for household gas and electric supply.

NPower have more than tripled my monthly combined gas and electric direct debit (from £29 to £96) and the calculation assumes that once my current tariff ends on 30th September then I'll go onto their Standard rate. Obviously, this is never going to happen, because I'll switch to another deal before my current tariff ends.

Are energy companies required to work out direct debits in this way by OfGem? When I phoned to complain about the increase, that's what I was told. They are only obeying orders! :mad:

Cardew

Yes Npower are correct, and of course the comparison networks are happy to oblige as it makes switching seem an attractive option - thus giving them more commission.

There is/should be an option to make a comparison against 12 months on your current tariff.

The more savvy customers never look at the 'savings' figure, just the total price of a new tariff.

beefturnmail

Sainsbury's recently tried the exact same thing with me I sent the below to them (copied to complaints) and they backed down the very next day. You are welcome to use this as a template.

Hi Thanks for the reply. I am not happy with this at all. Under section 27 of the Gas supply licence you are required to set fair and reasonable direct debits. The increase assumes I will be transferring to your standard tariff when my existing tariff has come to an end, which I will not be doing. It is neither fair nor reasonable to increase my direct debit 6 weeks prior to any potential change to the price I am paying. Therefore I formally reject the direct debit increase to £87.40. As I said I am happy to pay £59, which is based on my actual usage at the current tariff I am paying. Please confirm by Tuesday 2nd May
that my direct debit from next month will be £59. If not I will take the matter to the Energy Ombudsman.

Note my calculation of £59 was backed up by actual meter readings.

System

NPower is shooting itself in the foot. If you are on a 12 month fixed term contract, then the aim of the 6 month review is to ensure that your account is on track to achieve a zero balance at the end of the contract. Indeed, NPower, in the link below, says that it will automatically refund any credit balance over £5 at the 12 month review.

So where is the logic in going for a rolling 12 month review only to refund the credit balance in 6 months time. I would be inclined to tell them that if they do not reduce your payments to a more realistic level, then the only thing that they will be doing in 6 months time is repaying the credit on your Final Bill.

https://customerservices.npower.com/app/answers/detail/a_id/39/~/can-i-get-a-refund-if-my-direct-debit-account-is-in-credit%3F

oldfella

I believe that the level of the direct debit has to be agreed between supplier and customer. Tell them you formally reject their calculation but are willing to pay whatever.

teddysmum

I got a message saying that my current DD will result in falling behind when my current fix ends, but as above, that is because (as the government directed) everything has to be calculated assuming that we are all stupid enough to go onto the standard rate.


However, when you sign up for a new fix, a new monthly payment is calculated and you are asked if you approve.

[Deleted User]

Just go to the npower complaints procedure and start a formal complaint.
Point out why it is wrong and tell them what you have calculated is needed to get you just to the end of the fix with a zero balance.
Emphasis that is as far as they can calculate as you will be looking to move elsewhere at the end of the fix.

Cardew

oldfella wrote: »

I believe that the level of the direct debit has to be agreed between supplier and customer. Tell them you formally reject their calculation but are willing to pay whatever.

That is actually incorrect.

You sign a variable direct debit that authorises the company to increase/decrease the DD as they see fit to meet their estimate of costs.
i.e. they don't need your agreement to set the DD level. Many people don't notice the notification of an increase and find themselves paying hugely increased amounts.

That said, they have to give you advance notice of any change and that gives you the opportunity to object to any change. If both parties cannot agree on a compromise, then DD payment can be cancelled - this might mean ending some 'DD payment only' tariffs.

Obviously it is in both parties interests to reach a compromise - the OP's example is of an unjustified increase, but equally if he decided he could only afford, say, £5 a month;) his proposal would be unsustainable!

[Deleted User]

@cardew
I had this same issue with npower and the formal complaint with all the evidence to backup my calculated DD was required to get the DD set correctly. If you have the energy values for several years and make a reasoned argument then npower will set the DD accordingly. But is does seem that their customer service staff are unwilling to get involved and just repeat the mantra, the DD is what we say it is.

footyguy

SonOfPearl wrote: »

Apologies if this has been asked before, but I wanted to ask if someone knows what the regulations are regarding setting of direct debits for household gas and electric supply.

NPower have more than tripled my monthly combined gas and electric direct debit (from £29 to £96) and the calculation assumes that once my current tariff ends on 30th September then I'll go onto their Standard rate. Obviously, this is never going to happen, because I'll switch to another deal before my current tariff ends.

Are energy companies required to work out direct debits in this way by OfGem? When I phoned to complain about the increase, that's what I was told. They are only obeying orders! :mad:

MSE have an article just for people like you
http://www.moneysavingexpert.com/utilities/lower-energy-direct-debits