Energy Companies DD outrage!

SuperCT

I changed energy supplier from Scottish Power to Bulb when I discovered I was paying £300 per month and my account was over £1200 in credit. I closed my account with SP with the promise of a refund and still had to chase the refund 3 months later.
I then moved to Bulb, only £130 per month DD, but after 4 months I am £350 in credit. So again I have given an energy money for supplies I have not yet used.
Why is this happening?
Why are we letting energy companies do this?
What scam is it? Imagine how much of our money energy companies hold as a payment in advance in total?
Why can't we pay for what we use as we used to?
Good news is, I have contacted Bulb, who have reduced my DD to £80 per month and have also refunded the credit balance in full. I would like to keep my money in my account!!!
Please act now and make sure you are not paying in advance and over the odds to fund the energy supply companies.

Raxiel

The direct debit is meant to be set to cover the balance over the whole year. While £300 per month and £1200 credit sounds excessive (can't say for certain without knowing usage), you would expect to be in credit around this time of year to cover winter usage.

You do lose out on any interest you would have earned having that balance in your own account, true. It also means you don't get a big bill out of the blue in the spring (in theory at least). Most energy companies give a discount for paying by DD that outweighs any interest the balance could have earned.

If it still concerns you, a few of the smaller companies actually pay interest on credit balances. Iresa for example pay 4%.

SpotlandRules

If my memory serves me correctly, you pay in advance with bulb. The smaller companies normally take your 1st payment not long after your contract starts.

Assuming your dd payments are matching what you annual usage will be, £300 less £130, give £170. This would be about right, coming up to winter. I am assuming you are dual fuel.

System

Many suppliers still offer quarterly billing in arrears but you are unlikely to be offered a payment discount. As Raxiel states, most consumers will start a Winter period with their gas and electricity accounts in credit. My gas account is currently £100 in credit. As I expect to use 80% of my annual gas projection over the 5 winter months, this works for me.

As far as I can tell, without all the detail to hand, there are two issues here. Firstly, suppliers do not have a crystal ball, so it is up to consumers to give the supplier an accurate assessment of projected usage in kWhs/year. Secondly, actual usage then has to be closely monitored. For the supplier to do this with a degree of accuracy, it needs the consumer to provide regular actual meter readings. My guess is that both suppliers were using estimated readings.

There is no scam going on here. Energy suppliers pay their wholesale supplier in advance of supply, so I have no difficulty paying them in advance if it means a low price. In this respect, energy supply is no different from most things that we buy.

Robin9

Super CT - the DD is not really that important. It is at best at educated guess and will be based on what you tell the supplier your consumption is. When you switched to Bulb did you give them actual consumption in kWh for your last 12 months with SP ?

As always the advise is give readings at least once a month, read your bills and watch out for the amount of credit or debit. That way you dont have big surprises.

Bark01

Put simply:

If you are on a fixed DD then its will be set up so so you pay the same amount each month, in the summer you will over pay and build up credit and in the winter you will under pay and build up debt. The aim is that at the end of your first 12 months you will come out with a zero balance.

The last 3 months have been summer months where your usage is low so you will be overpaying to build up credit for the winter.

The next 6 months will be winter where usage is high so you will end up underpaying and eating into that £350 credit.

Most main suppliers offer a variable DD where you pay for what you use each month

btr30

For most people who are paid the same each month, it is a good budgeting to pay the same monthly outgoings for energy, and it all works out at the end of the year.
If you provide accurate annual estimated usage in kWh, and same consumption pattern is maintained, the fixed monthly DD works fine for both supplier and customer.

System

btr30 wrote: »

If you provide accurate annual estimated usage in kWh, and same consumption pattern is maintained, the fixed monthly DD works fine for both supplier and customer.

A year ago I would have agreed with you 100%. Unfortunately, it would seem that some suppliers are re-calculating the annual cost at the 6 month review point based on a rolling 12 month cost - that is, the cost for next 12 months is based on 6 months on present tariff plus 6 months on SVT plus/minus any debit/credit balance - rather than a simple re-assessment of the DD to achieve a zero balance at the end of the fixed term contract.

footyguy

SuperCT wrote: »

I changed energy supplier from Scottish Power to Bulb when I discovered I was paying £300 per month and my account was over £1200 in credit. I closed my account with SP with the promise of a refund and still had to chase the refund 3 months later.
I then moved to Bulb, only £130 per month DD, but after 4 months I am £350 in credit. So again I have given an energy money for supplies I have not yet used.
Why is this happening?
Why are we letting energy companies do this?
What scam is it? Imagine how much of our money energy companies hold as a payment in advance in total?
Why can't we pay for what we use as we used to?
Good news is, I have contacted Bulb, who have reduced my DD to £80 per month and have also refunded the credit balance in full. I would like to keep my money in my account!!!
Please act now and make sure you are not paying in advance and over the odds to fund the energy supply companies.

Theres a couple of reasons this couyld be happening.

Paying a fixed amount each month evens out the payments over the yaer. Otherwise you pay for what you use, and we all use more during the cold winter period.
So it could simply be that you are in credit in preparation for the cold winter period coming.
(If you really only want to pay for what you have used, when you have used it, these type of tariffs are still available, but are not usually the cheapest)

However, as your current supplier has agreed to both refund you the credit and reduce your monthly payments, the cause it probably that you are over-estimating your anticipated annual, consumption when you compare and switch.
This not only results in you paying more than necessary each month, hence a large credit accrual, but also could be adversely affecting the results you are getting from a comparison site.

Get your anticipated annual consumption in kWh accurate, and consult again a comparison site to find the best deal for you

Good luck!

Richie-from-the-Boro

My actual real cost [E7 SP tariff] on July 29th 2017 @ a winter 21+°C


Your current payment per month is :
£ 50.00

Your Personal Projection Electricity Only for the next 12 months is :
£712.96

Your actual usage in the last whole 12 months was
- Day 2,455 kWh
- Night 5,864 kWh
- Total calculated annual consumption pa 8,319 kWh

So the calc in my case [with 6 weekly user counter readings] is : CAC ÷ 12 = £50