Variable direct debits (for fixes) - is this the future?

grumpycrab

Looks like some companies are charging higher direct debits over winter; is this common practise now? I guess if utilities have to pre-buy power it eases their cash-flow. Does this mean the best tariffs in the future will be pay-12-months-up-front? eg like land-line rental.

wavelets

grumpycrab wrote: »

Looks like some companies are charging higher direct debits over winter; is this common practise now? I guess if utilities have to pre-buy power it eases their cash-flow. Does this mean the best tariffs in the future will be pay-12-months-up-front? eg like land-line rental.

It's becoming more common, particularly with price sensitive small suppliers

It's another cost cutting measure to keep prices low to attract new customers.

brewerdave

It's ironic when you consider that the main selling point of paying by DD, was to spread your energy payments over 12 equal installments!!

wavelets

brewerdave wrote: »

It's ironic when you consider that the main selling point of paying by DD, was to spread your energy payments over 12 equal installments!!

Whatever the sales line you were told, it was all about cutting costs for the supplier, who then usually passed on some of those cost saving measures to the customer.

[Deleted User]

Last winter for instance put a big spike in most people`s usage. It did mine with the prolonged "beast from the east " destroying my usual economic gas usage of 8000 kwhs up to 12000 kwhs ..So of course my d/d was correctly increased and has remained at that level now we are only one month into winter proper.
Personally I m in favour of my supplier keeping a chunk of my money in their account to cover the much higher winter usage,, at least £300 is fine, the banks give me nothing in interest ..That was the old system, build up a credit in the summer to cover the winter.
Now some are clamouring for their money back if the supplier has a tenner in credit

Boxman

Houbara wrote: »

..That was the old system, build up a credit in the summer to cover the winter.

It's perhasps slightly unfortunate for my supplier (OVO) that my contract began on the 1st October which means that, assuming this winter is typical I will have about an £85 debit at 1st April. They have just tried to get me to increase my dd but I was able to show them that my current payment level should claw back the deficit through the Summer and give a small surplus at the 1st October when the contract ends. They have accepted my calculation and the dd remains the same.

When I began the contract the credit balance from my previous supplier (Iresa) was getting on for £200 so its swings and roundabouts.

Anthorn

grumpycrab wrote: »

Looks like some companies are charging higher direct debits over winter; is this common practise now? I guess if utilities have to pre-buy power it eases their cash-flow. Does this mean the best tariffs in the future will be pay-12-months-up-front? eg like land-line rental.

I think direct debits have always been variable. For example when I was with Scottish Power up to a month ago, when I submitted a monthly meter reading in the winter when my consumption was increased they increased my direct debit. However the problem with that was that the DD was never reduced during the summer when my consumption was decreased to the effect that I built up an account credit of over £200. I like the way my current EDF does it with my annual consumption split into 12 equal monthly instalments. But I expect EDF to increase my direct debit if my consumption is increased when I submit my 6-monthly meter reads.

I suppose increasing the DD in the winter and hopefully reducing it in the summer might be hard for some people but the overall cost over the year should not change.

Takmon

Houbara wrote: »

Personally I m in favour of my supplier keeping a chunk of my money in their account to cover the much higher winter usage,, at least £300 is fine, the banks give me nothing in interest ..That was the old system, build up a credit in the summer to cover the winter.

You must be using the wrong accounts, there are accounts that pay a decent rate of interest if you have a look at the banking section on this site.

Anthorn wrote: »

But I expect EDF to increase my direct debit if my consumption is increased when I submit my 6-monthly meter reads.

You only take readings every 6 months?. It's a much better idea to take at least monthly readings so you can keep a better track of your usage.

joe134

Hi Anthorn , I am still with SP,ain’t taken the plunge to leave yet !
I’m having the first bother with them in approx 20 years.
I changed to their 2 year tariff, mid dec.( no penalty), main reason,my dec 18 now expired.
My Dd always comes out 1st of the month.
Jan 1st no Dd taken , ergo £166 in debit.
Contacted them, ok, no probs, take it 1st of feb, ok with that, so I would be £300+ in debit, nothing unusual for me with SP, it’s the norm.
Then a warning e mail, came, need to settle, so
I phoned, fell out with Bolshie guy, insisted I paid the £166 by cc, he said he would set Dd for feb1st, not so, he has set it for 1st of March!
Rang again, nice lass apologised, said I had no need to pay £166, it would just be in debit, as I have always been, (unlike yourself,)she offered to reset Dd for feb 4th, of leave till 1st March, so I have left it.
Dd has gone up from £112 to £144, was £83 in dec18, so a bit of a rise, expected though.
Come 1st March, probably will still be in debit.
In my case, payg, monthly would be better, (in arrears ,) of course! pity they cannot, or won’t do something like it, I.m fortunate to be able to pay the high rate during winter, some are not.
after this, still undecided whether to jump ship:)
Daily mail has a couple of articles about a few of the newer companies, and how they operate, bit of an eye opener.
See how Sp pans out, no rush, the new cap has just been decided, so expect all dd’s Etc to be adjusted accordingly.:beer:

grumpycrab

joe134 wrote: »

I’m having the first bother with them [SP] in approx 20 years. I changed to their 2 year tariff

Did you do a comparison first? Guess the "no penalty" referred to your previous fix (if the current one - do a comparison!).
Also, if you dont like being in debit - pay some back.

Anthorn

Takmon wrote: »

You only take readings every 6 months?. It's a much better idea to take at least monthly readings so you can keep a better track of your usage.

That's how EDF does it on the tariff I'm on, Exclusive Easy Online Dec 19: i.e. "We request meter readings every year but we will try to do it every 6 months but we don't guarantee it" and "We may revise direct debits when we receive a meter reading but that's not guaranteed".

EDF's calculation of my consumption over 12 months split into 12 equal monthly instalments is pretty accurate so I would not submit meter readings unless they increased the direct debit or I know my consumption has increased.