Autoswitch - V- A good dea

brewerdave

QrizB said:

It seems to me that the 50% (or whatever it is now) of customers who have never switched for one reason or another - too busy, too complicated, whatever - would be relatively well served by an competent autoswitching service (even if it isn't a whole-of-market comparison) in that they would actually switch to a cheaper supplier.

There is high degree of resistance amongst the non switchers to moving away into the unknown. Spent literally ages trying to talk my late mother and m-i-l into switching in the past - but they both stuck with BG and their regional electric supplier! As my b-i-l has POA for the m-i-l now, thought it would be sorted - but no ,she is still with BG and EDF!

niktheguru

GinCo said:

Bumping this topic back up, to say that I think there may be 'gaming' of the system by suppliers for electricity-only properties with Economy7/storage heating.

I'd become unhappy with Bulb setting a 'minimum' Direct Debit > 30% above by self-set one, for the obvious reason that it meant building up credit for 8-9 months against unpredictable 'winter' usage (with the heating on) despite 'top-up' by credit/debit card being an obvious way to additionally pay if/when necessary. Their pattern of price rise was also narrowing the differential between day/night kWh prices and significantly increasing the poll-tax-style daily standing charge.

So I was nudged into switching by the MSE email about the relative cost of similarly highly customer-rated Igloo, 'DIY via MSE' and realised there was a significant issue in the two companies' tariffs that MSE Energy-Club comparison hadn't captured.

Igloo 'autosets' the in-advance monthly Direct Debit amount, so it should be comparable to Bulb's 'recommended' level (that being what Bulb will want, at least at first). In fact, it was >10% below Bulb's 'minimum' and >40% below their 'recommended' and Igloo pays 3% interest on accrued credit-balance. That seems to result from Bulb's 'projection-algorithm' counting all usage at the 'day' rate, whereas Igloo really has has a single 24/7 price per kWh.

I'm here now because my switch has registered as completed, and Energy Club has just alerted me to a large saving if I switch... to Bulb. This is absolutely not the case for me; I know for a fact that Bulb would milk my current account by much, much more per month and pay me 0% on the extremely high credit-balance that would accrue. It's hard to be sure of the exact 'hidden cost', but if I did nothing else but switch (letting Bulb run the DD amount) I'd be having a credit-balance running into hundreds of pounds just because Bulb will assume that at any given moment I'll start only using electricity outside of the Economy7 hours... but Igloo has incentivised itself to not let credit-balances build up.

There is no way that I'd currently sign up for 'autoswitching', and I think it's worrying that in the current 'market' that service could well be being fooled by the traders (at least for some potential users). A bit like a 'best-price carrot & potatoes auto-buyer' going round the stalls without knowing that produce being 'washed' or 'unwashed' affects the 'true' price/kg.

You're talking a lot about the "direct debits" here. As i'm sure you know its all about the unit rate and standing charge, and not the monthly direct debit. As you have alluded, you can have a massive direct debit and create a huge credit balance, but that doesn't mean its not the cheapest provider. (though bulb never is!) You are entitled to that credit back. You only pay for what you use. But nowadays with margins so tight for suppliers, they prefer customers to be in credit rather than debit, as they then don't have to chase people and go via debt management routes to get the money owed.

Personally not a fan of autoswitching, as you lose the control of who you are going to. Although it may be beneficial to those stuck on standard tariffs with the big 6 there is no guarantee they'd move you to a supplier who will give you good customer service....they will move you (usually) to someone cheaper, but who also gives them a massive commission. Much better to do it yourself.

GinCo

niktheguru said: You are entitled to that credit back. You only pay for what you use.

Certainly. But I found the proportions involved were significant, and really do think that that could badly affect someone on a tight monthly budget (let alone actually in financial difficulty).

JJ_Egan

Once again its basic sums that so many do not understand .

Unit cost + daily standing charge = what you pay .

Direct Debit comes from expected yearly usage .

Meter Readings monthly keep all this in check .

niktheguru

GinCo said:

niktheguru said: You are entitled to that credit back. You only pay for what you use.

Certainly. But I found the proportions involved were significant, and really do think that that could badly affect someone on a tight monthly budget (let alone actually in financial difficulty).

That’s why knowing your annual consumption in kWh is critical, and not just using estimates or “number of bedrooms”

GinCo

Once again its basic sums that so many do not understand .

Quite a lot of those people may well not be particularly helped by education on numeracy, or the difference between usage-charged and the monthly amount the supplier direct debits... people can lack capacity and/or be cognitively-impaired for a range of reasons, although still living 'in the community' with bills to pay from low/very-low DWP benefit-based incomes. For carers, professional or otherwise, an autoswitching option from a reputable organisation like MSE could look like a good/safe choice to encourage as a 'fire and forget' solution to the rigmarole of getting them the lowest cost for the kWh they use even annually.

But as I pointed out the Cheap Energy Club's 'DIY compare and switch' appears to be oblivious to how 'projected cost' can be inflated by algorithms that calculate all electricity usage being at the higher 'day rate' despite the tariff having a lower 'night' one and thereby being overall cheaper on accurate consumption-figures supplied... triggering an autoswitch to obtain the calculated saving. That can inflate the direct debit amount 'spreading the projection' over 12 equal payments, which could mean a significant monthly increase in direct debit, which could cause difficulty even though it accumulates as a credit-balance. Such a credit is held by the supplier, rather than being immediately-accessible 'cash savings' in a bank account.

For someone like me (and perhaps you) that's a minor irritation. I am not in energy-poverty, and can bear a monthly direct debit significantly exceeding 1/12th of the actual annual cost of use. If or when I'm motivated enough to do something about my money cushioning a supplier's cashflow rather than earning interest for me I can and will. Others can't or won't, despite needing that money.

I don't want to be rude, but I'm not a subscriber to "I'm alright, Jack" thinking. Both personally and professionally I've spent too much time trying to help unpick messes that 'anyone should be able to avoid' for people who didn't or couldn't for entirely understandable reasons. There are lots of people in this country suffering unnecessarily from 'taxes on ignorance and inability', on top of the ubiquitous 'taxes on poverty'. MSE is to be valued and praised for its record, but my personal experience made me wonder about electricity-supply autoswitching being offered with 'the market' as it is.

I hope that helps clarify the point I was intending to make when I posted on this thread.

GinCo

That’s why knowing your annual consumption in kWh is critical, and not just using estimates or “number of bedrooms”

Please see above. IMHO there's an issue even if you do know your annual kWh consumption (even averaged over years with exceptionally cold or mild winters).