Variable Direct Debit for energy supplier

majeedk

For gas supply, I have been with Zog Energy for a while. I pay them pay via Direct Debit. I always send them monthly meter readings at the start of every month. However, today I found out that they have been charging me based on estimated annual usage divided by 12 as I receive an email from Zog to notify me of Direct Debit amendment. Since my usage for the whole year was really low, they have reduced the monthly Direct Debit amount to less than half of what it was. It turns out that I have been overpaying for nearly a year and they owe me nearly £200. 

So I called them today and I was informed that:

1. They only review accounts after 6/12 months and it will be too much work for them to do it more frequently or take a look at actual readings to charge me exact amount. The guy on the phone said that I can ask Zog to do ad-hock review but we can't do it every month. The guy also said that Zog does this so you have a buffer for winter months when the usage is high. I asked why - as my credit history is good and I can manage my bills just fine. He had no answer to this.. So Can an energy company refuse to charge me exact amount based on usage? My previous energy supplier and my current electricity supplier charge(d) me via variable Direct Debit. 
2. Why do I had to call Zog to ask for a refund. Aren't they required to automatically return the overpayment after they have identified this and reduced the Direct Debit  amount. 
   
3. The guy further said Zog doesn't make any money/interest from money they overcharge. Isn't it plain lie. I recall that couple of years ago, some other energy providers were giving interest on amount customers overpaid.

Can I now refuse to overpay and demand Zog to charge me based on actual usage via meter readings? 

Gerry1

This is one of my gripes.  Many companies do this because 'it helps their cash flow' and /or earns them interest.  Apart from tying up your money for their benefit, it confuses vast numbers of consumers, as evidenced by all the wails along the lines of about 'Help -  Ponzi Energy have raised the price of my gas from £5 per month to £100 per month, the meter must be faulty !'.

If Ofgem were any good, they'd rule that Variable Direct Debit was the default except for customers that specifically requested Fixed Direct Debit.  It would make bills far simpler to understand, and it would also alert users to unexpectedly high usage.

Unfortunately, your only option is to switch to a helpful company that offers this.

[Deleted User]

Energy suppliers do their best for customers to help them manage their money. There are a lot of factors to consider though which can cause things to go wrong, ie. not enough usage history and having to use previous occupier's history, incorrect / estimate readings. 
Averaging it out over the year helps a lot of people, if it's not for you and it's not the energy supplier's policy for what you want, then switch, simples!
The hanging onto money to gain interest is a big myth. It's just not worth the aggravation for a supplier. 

Smodlet

Gotta disagree with you, Gerry1, about the variable DDs; might as well go back to just paying quarterly bills and lose the discount for all the good it does your cash flow.  Spreading out the annual cost evenly is probably the best thing the energy industry has ever done, if you ask me.

As for customer service, I finally found the stones to leave the Big 6 this year and have really found out what I was paying over the odds for:  A good website and (sometime) decent customer service:  I am here to tell you it is not worth it.  I am useless with Excel but realised, if I want graphs, I have to make my own.  On the whole, it is not worth the effort; I am saving money, leave it at that.

Gerry1

Smodlet said:

Gotta disagree with you, Gerry1, about the variable DDs; might as well go back to just paying quarterly bills and lose the discount for all the good it does your cash flow.  Spreading out the annual cost evenly is probably the best thing the energy industry has ever done, if you ask me.

All customers should be given the choice.  I'd have variable DD, preferably monthly.  Easier to check that everything is correct, no pot of gold building up that may get paid back slowly (or never) if they go bust.  You'd still have fixed DD so you'd be happy.  Horses for courses - what's not to like?

Neil_Jones

To be honest I'm not quite sure what the problem is, Zog do not do and never have done anything other than monthly direct debit, this is documented on the website.  The overpayment thing is normal in the summer in preparation for the winter which is a consequence of how the system works, and the "energy interest" thing comes up regularly but has no basis in reality.

I suspect the OP has just looked at the headline price and assumed Zog will fit in with them, when the oppose is true.  Only real solution here is to move to another provider that will bill how you want, and a lot of the smaller ones just don't do the variable direct debit thing.

Smodlet

Guess I'd never go with a firm who might not pay back credit; I'm still cautious there and, when you factor in the WHD, it tends to eliminate the small fry anyway.  I appreciate most are just looking for the best rates but all circumstances need to be taken into account.

Thank you, as always, for your wise words, Gerry1.  I have learned a lot from you.

majeedk

Gerry1 said:

All customers should be given the choice.  I'd have variable DD, preferably monthly.  Easier to check that everything is correct, no pot of gold building up that may get paid back slowly (or never) if they go bust.  You'd still have fixed DD so you'd be happy.  Horses for courses - what's not to like?

So I am right to infer that currently there is no legal requirement from Ofgem that forces energy suppliers to offer Variable Direct Debit as an option?

Gerry1

majeedk said:

Gerry1 said:

All customers should be given the choice.  I'd have variable DD, preferably monthly.  Easier to check that everything is correct, no pot of gold building up that may get paid back slowly (or never) if they go bust.  You'd still have fixed DD so you'd be happy.  Horses for courses - what's not to like?

So I am right to infer that currently there is no legal requirement from Ofgem that forces energy suppliers to offer Variable Direct Debit as an option?

Yup, AFAIK they could ask you to pay in Bitcoin or Mars bars if they wanted to, you have to vote with your feet if you don't like it.

When I'm Director General of Ofgem, it'll be one of the first things I'll sort out, along with mandating that the poorest and most vulnerable in society (on pre-payment meters) aren't ripped off with the most expensive tariffs.  That should be one of the (rare) genuine benefits of smart meters: they can be switched remotely between credit and pre-payment mode, so any additional overheads of pre-payment meter accounts must now be negligible and should be absorbed in the same way that Royal Mail don't charge any more to deliver a letter to a remote hamlet on a Scottish island.

And don't get me going about the million and a half vulnerable people without bank accounts who can't buy a ticket with cash at an unstaffed rail station (tube to follow soon) and risk prosecution if they board a train without a ticket... 

Smodlet

Wow, Gerry1.  May I be your secretary when you are DG of Ofgem?  You should know my shorthand is non-existent...