A pattern of direct debit increases shortly after switching energy supplier with USwitch

wrightgs

USwitch requires previous energy usage data to assess the best deals for switching and although I have openly used this data and my circumstances (house, number of people in the property etc.) have not changed, I have seen a pattern with the last three energy company switches where 3-4 months into a new contract they indicate that the direct debit is insufficient and needs to increase.
Are energy companies luring customers in only to increase costs later and effectively eliminating most of the savings highlighted at the time of switching?

MWT

There is no cost increase unless the price per kWh /Standing charge change...

If you are not looking at the actual costs and just judging your potential 'saving' based on the DD amount then you are likely to continue to make the wrong move.

The way the 'savings' are calculated when switching are misleading as they make assumptions about your current costs that are likely not to be valid.

Always look at the actual costs (kWh/Standing Charge) and work out the annual cost using your own figures for consumption then decide if there is really a saving to be made...

Biscuit_Tin

wrightgs said:

USwitch requires previous energy usage data to assess the best deals for switching and although I have openly used this data and my circumstances (house, number of people in the property etc.) have not changed, I have seen a pattern with the last three energy company switches where 3-4 months into a new contract they indicate that the direct debit is insufficient and needs to increase.
Are energy companies luring customers in only to increase costs later and effectively eliminating most of the savings highlighted at the time of switching?

Welcome to MSE
There's lots of good MSE guides and articles to read here.
Have you, for example, had an opportunity to read and digest this one yet?
https://www.moneysavingexpert.com/utilities/lower-energy-direct-debits/

JJ_Egan

Never seen that on many energy changes.

But i only look at the prices when changing not estimated DD or usage .

wrightgs

I have used actual costs (kWh/Standing Charge) and a view of my total annual spend, but the last three times I have switched I have seen the same pattern i.e. 3-4 months in and the original cost projection and direct debit is suddenly insufficient!

MWT

If the increase is unjustified the net result will be to build up extra credit in your account, and I can see why you would not want to do that, so if you feel it is wrong I would certainly resist the change.

The only exception though, is that if you are approaching winter and you have not yet build up a buffer to cover the winter period, perhaps because you switched near the end of summer, you will find that most providers will want you to pay more so your account does not go negative over the winter months...

matelodave

There really shouldn't be a problem with your energy account going into debit over the winter months if the DD has been set correctly based on a fairly accurate estimate of your consumption as it should balance out after 12 months.

If your DD is based on your Estimated Annual Consumption then the DD should be around 8.33% per month however most people use significantly more during the winter (66%) than they do in the summer (33%) so depending on when you start a 12 months deal depends on how much you'll be in credit or debit.

If you start in in April you'll have a healthy credit come October which will get used over winter to balance out by next April. However if you start in October you'll have a big debit by April which should get paid off by October. Unfortunately a lot of Suppliesr and even more customers cant actually understand that. Customers think they are being ripped off and want their credit back in October or suppliers see a big debit and want it reduced in April whereas if they've done their sums properly and leave it alone the DD should balance out at the end of the fix.

Petriix

In response to the OP's actual question: yes, I've seen it reasonably frequently and it happened to me last month after my most recent switch to Outfox The Market. Thankfully they were happy to reduce my DD again when presented with my explanation of my lower usage.

I believe that companies like to build up customers' credit balance to help with cash flow. It certainly helps them to err on the side of caution (i.e. in their favour) until challenged.

However, as pointed out above, there is normally no net loss to building up credit as it all adds up to 0 in the end. But, like me, you might prefer to have the money in your own bank possibly earning interest; although some suppliers do pay interest on credit balances.

MWT

matelodave said:

...r or suppliers see a big debit and want it reduced in April whereas if they've done their sums properly and leave it alone the DD should balance out at the end of the fix.

The problem from their perspective though is that they are having to pay for the energy and float the customer credit for the difference, and with a lot of the smaller companies, cash-flow is a problem, so I don't blame them for wanting the customer to at least stay current during the winter, and then the problem sorts itself out the following year. As long as you don't keep switching every year...