Unfair Energy charges why do they discriminate

AndyP1957

How can Energy companies justify charging people who pay by Standing Order and clear any surplus needed immediately than they charge Direct Debit customers.
People on DD's get better rates yet payments can still be missed, yet someone who has paid by standing order and cleared any balance owing without any missed payments are penalised.
In my instance on switching to EDF I initially for once agreed to pay by DD. However trying to increase my Bills last summer by 25 percent which I knew was incorrect saw me complain as I already had a big credit balance going into the summer months in addition to my solar panels working better at that time of year.
After much debate they allowed me to switch to standing order BUT did not tell me the unit costs would increase, I found this by accident when checking a bill.
What is crazy is that over the past 12 months I have had two refunds of credit balances totalling £500, and still have a decent balance - yet still they wanted to increase my payments hence my refusing to use direct debits, I know my useage and want to be in control of my pension, without suddenly finding that a considerably larger payment had been taken,
Needless to say I wont be staying with them.

Neil_Jones

What's wrong with direct debit payments?  If you can pay by standing order you can almost certainly pay by direct debit.  Why are you making life difficult for yourself?

You're going to be hard pushed to find any provider who doesn't actively encourage direct debits - indeed a lot of the smaller ones will only accept that sort of payment.

UnclaimedEnergy

Direct Debits are normally collected in advance of a bill and are consistent payments to them. Suppliers prefer this style of payment as in the majority of cases, they know how much will come in making it easier to manage their cash-flows.

This is back up by the fact that none of the suppliers who have joined the market since at least 2014 offer pay-on-receipt due to the lack of certainty of payment.

From what I can see, the only suppliers which offer pay-on-receipt are:

• Scottish Power
• E.ON
• EDF
• Utilita
• Utility Warehouse
• OVO

Pay-On-Receipt tariffs likely have added risk priced into them, along with extra costs due to it being a more manual billing process than Direct Debit. Unfortunately it's just a premium you would need to pay I'm afraid.

AndyP1957

If you live on a pension where you have to watch every penny, you cannot have the surprise of an Energy company increasing your bill by over £35 a month, particularly when the account without fail had always been in credit. Notifications from companies by email or the post do not always arrive which can compound the surprise. If you have never lived on the breadline you will not appreciate or understand why I have said this.
I agree that Pay on Receipt is an additional risk, but equally so are Direct Debits these days when people struggling due to furlough etc need money for food bills etc so they just contact their banks to stop accepting a direct debit - so in reality there is no more risk between the two.
To me, if people default on payments then yes by all means charge more but under the current system you are deemed guilty without a trial.

MWT

AndyP1957 said:

I agree that Pay on Receipt is an additional risk, but equally so are Direct Debits these days when people struggling due to furlough etc need money for food bills etc so they just contact their banks to stop accepting a direct debit - so in reality there is no more risk between the two.

The risks are not the same as although people can cancel they mostly do not as they want to maintain their access to the cheaper tariffs.

This is really no different to the justifications for charging pre-pay customers more as well, the energy suppliers are not supposed to use one group of customers to subsidise another, so if you choose the cheapest means of paying them with the lowest admin overhead you get a cheaper rate, pick a method that is not so cheap for them to use and administer and you pay a little more...

AndyP1957

MWT I disagree, having worked in Banking most of my adult life I am aware of the amount of direct debits that people do cancel on a regular basis. As I commented if it comes down to a choice of food in your mouth or paying an over inflated direct debit that you cannot afford which do you choose. Additionally if you are struggling for money and the energy company suddenly puts the direct debot up significantly which often occurs, banks will bounce direct debits because the money is not there to pay them.

UnclaimedEnergy

I'm sorry to disagree but there's definitely more risk for suppliers in Direct Debits over pay on receipt.

The direct debits get taken a month in advanced, so if a customer is unable to pay then there is a months buffer in there for this. Plus if a customer does cancel the DD, the supplier should get a notification of this and can be proactive.
With pay-on-receipt there's no guarantee when the customer will pay on time and there's no up-front warning for suppliers, it's more of a bill and hope system.

If you go for a supplier which offers fixed direct debits, then you won't end up having any shock bills come out and you will also know exactly what you will be paying every month, arguably allowing for easier budgeting. 

The main thing you need to do though is give monthly readings and be proactive with wanting to try and reduce your DD if you start building up credit etc. Don't wait for a supplier to notice they're sat on £500 of your money as most will want to just keep hold of it.

MWT

However you feel about this, it ultimately doesn't matter, if your energy supplier does not agree  with you.

They mostly seem to believe that the DD approach is cheaper and better for their cash flow and they price accordingly.

So either accept that or find a supplier that is happy to bill the way you want at the same price as their DD customers.

There are also suppliers that are far more approachable and flexible with regard to managing the DD payments amounts so you can both avoid building up a large balance and avoid debt by actively adjusting your DD payments during the course of the year. Octopus would be on for example.

Cardew

The bottom line is that nearly all companies(not just energy companies) find getting their customers to pay by DD is the most cost effective method of running an account.

So most energy companies have paying by DD a stipulation for customers taking their cheapest tariff. You are free to leave the company if that doesn't suit you.

You problem appears to be an unfortunate experience with DD payment. Companies MUST send you advance notice of an increase in DD and if they haven't raise a complaint to the company and if you get no satisfaction raise it to the Omunsman.

However under the terms of the Direct Debit Guarantee if your DD has increased phone your Bank and they MUST immediately refund the DD payment by crediting your account,

UnclaimedEnergy

@AndyP1957 how often had you provided EDF with meter readings over those 12 months? 

Unless you changed tariff or suddenly provided a meter reading after months without one, there shouldn't really be a need for them to increase your DD.

Homeowners who aren't retired and have to work from home are likely using 20%+ more electricity last summer than the one previous. EDF may had done an EAC uplift across a lot of domestic customers for the ones that hadn't been providing meter readings. (Potentially could explain why they wanted to increase your DD if they changed your EAC).

AndyP1957

UnclaimedEnergy said:

@AndyP1957 how often had you provided EDF with meter readings over those 12 months? 

Unless you changed tariff or suddenly provided a meter reading after months without one, there shouldn't really be a need for them to increase your DD.

Homeowners who aren't retired and have to work from home are likely using 20%+ more electricity last summer than the one previous. EDF may had done an EAC uplift across a lot of domestic customers for the ones that hadn't been providing meter readings. (Potentially could explain why they wanted to increase your DD if they changed your EAC).

I go online at least once every 8 weeks and update the figures, I have even had emails 2 weeks later asking for a meter read. I won't be staying with them that is for certain as I just checked their proposed new tariff renewal offer and they wanted to increase the amount by 36 percent. Using one of the comparison sites I have been quoted at best by one of them a mere £2 increase, so even allowing for more charges for standing order it will be better considerably. I know there are price increases in April, this is why I am looking to tie in a new deal soon as I am almost within 49 days of the end of the initial contract.