I’m having a major mental breakdown, please help.

Hey1997

So this thing is seriously bothering me now and making me depressed because I just can’t seem to get it. It’s about the monthly direct debit payments. They say you pay estimates how does that work? Let’s say I switch the supplier on 01/01/2020 and give them my previous year’s usage (from 01/01/2019 to 31/12/2019) and they work out the monthly direct debit from that. I get it until here but it gets extremely confusing when the usage is actually different than what I pay. Let’s say on 31/03/2020 I give them new meter readings and the readings show that I paid more than what I used so will the bills from 01/04/2020 be based on my usage from 01/01/2020 to 31/03/2020 or will they remain the same as of what I paid from 01/01/2020 to 31/03/2020?

elsien

The alternative is just to send them monthly readings then they don't rely on estimates at all.

Neil_Jones

Hey1997 wrote: »

So this thing is seriously bothering me now and making me depressed because I just can’t seem to get it. It’s about the monthly direct debit payments. They say you pay estimates how does that work? Let’s say I switch the supplier on 01/01/2020 and give them my previous year’s usage (from 01/01/2019 to 31/12/2019) and they work out the monthly direct debit from that. I get it until here but it gets extremely confusing when the usage is actually different than what I pay. Let’s say on 31/03/2020 I give them new meter readings and the readings show that I paid more than what I used so will the bills from 01/04/2020 be based on my usage from 01/01/2020 to 31/03/2020 or will they remain the same as of what I paid from 01/01/2020 to 31/03/2020?

It is an estimate because what's it is. If we have a freezing cold winter for months on end like 1963 or 1948 you will use more energy, its as simple as that and so the previous year's estimate along the lines of more "normal" weather goes out the window.

But if we have a mild winter where we don't have to have the heating on *that* much then you'll use less energy and thus you'll have a larger credit by the time September comes round.

A lot of the issues we hear about on here with massive debts are because the meters aren't being read for months on end so the bills are estimated and then people wonder why they think they're heating half the street. This is easy to avoid - read your meter and submit them to your provider, 1st of the month every month. You'll have a better idea then of your true usage, not what the energy company thinks your using.

molerat

Keep giving them monthly reads. The DD is set for the whole of the year based on your estimated use but some suppliers may do a mid term review and reduce / increase the DD as necessary. Others will wait until the end of the year and refund the excess balance.

Hey1997

So if I give them readings every month and they keep taking the same amount of direct debit, I won’t get over or under charged (since I’ll either be on credit or debit) right?

RelievedSheff

That depends if your direct debit payment is enough to cover your annual usage.

Sign up to your suppliers website and monitor your account and submit your meter readings. Keep an eye on your usage and you will quickly be able to gauge if you are paying enough.

You will build up a credit balance during the warmer summer months and then in the winter you will use this credit balance up.

In theory at the end of your contract you should have a zero balance but it rarely happens like this.

Ectophile

Provided the initial estimate was reasonably close, the aim is that you pay the same amount every month for a whole year. In practice, you build up a credit over summer, and use that credit up in the winter.


That will only change if it becomes apparent that the initial estimate was way out. Provided you aren't building up an excessive credit or debit, they will do nothing until the end of the year.



At the end of the year, they will look at how much credit or debit you have built up over that year, then tweak next year's direct debits to try to bring that down to zero over the course of the following year.


For people with predictable usage, it works quite well, and avoids big bills in winter and tiny bills in the summer.

Gerry1

If you're that worried, just switch to one of the energy companies that offers Variable Monthly Direct Debits, e.g. E-On. Provided you submit meter readings every month you'll pay for exactly what you've used, just as with a petrol pump. It makes bills easier to understand, and there are no surprises with the DD amount suddenly increasing if it turns out that you've been using more than expected.

Of course, you'll get higher bills in winter so you'll have to keep an eye on it if you run your bank account close to the limit, but you'll soon be aware if your energy is costing more than you expected.

Neil_Jones

Hey1997 wrote: »

So if I give them readings every month and they keep taking the same amount of direct debit, I won’t get over or under charged (since I’ll either be on credit or debit) right?

Like I say, your direct debits are payments towards energy usage.
You may have paid £100 a month since March this year, but you won't have used £600 worth of gas and electricity in all that time unless you want to live in sauna conditions. Those will carry forward to what you will use from October onwards , the colder months - its normal to pay next to sod all in June, July and August (and to an extent May and September too) in this country when a bill is presented.

In all honesty your direct debit figure is meaningless to an extent because you're just spreading an annual cost out over the year.