Do power companies feed fake offers into comparison sites ?

catz77

I have used energy price comparison sites for years. I always base my search on the amount of energy used the previous 12 months to be more accurae.. Having found my best buy and signed up I pay the first bill which is the price quoted. Come the second month and companies announce they want to increase the monthly direct debit without explanation. Asked to explain its always that you are using more power than they expected, even though your inquiry was based on the power previously used.  Is it a case that companies deliberately deflate the declared monthly bill just to trap us into signing up in the hope inertia will  prevent a move elsewhere or simple incompetence?

dogshome

NO

You have both agreed a contract that they will supply you with energy priced at XX a Kilowatt. plus a YY Standing charge for a year or more.

If that contract started at this time of year, you would build up a Credit with your D/Debits over Summer that would pay for your increased use in Witter -  Start the contract in the Autumn and the account will immediately go into debt.

Whilst the monthly D/Debit payment is supposed to account for this, many suppliers will raise the D/Debit amount as soon as they see a debt on the account - If you are sure of your ground Complain 

[Deleted User]

catz77 said:

Asked to explain its always that you are using more power than they expected, even though your inquiry was based on the power previously used.  Is it a case that companies deliberately deflate the declared monthly bill just to trap us into signing up in the hope inertia will  prevent a move elsewhere or simple incompetence?

I think that you will find that we have all used more energy in the first 4 months of this year compared to previous years as it has been an unusually prolonged Winter. The supplier’s computer will have revised your annual consumption and re-priced your annual energy cost. There is nothing sinister going on.

Reed_Richards

dogshome said:

NO

You have both agreed a contract that they will supply you with energy priced at XX a Kilowatt. plus a YY Standing charge for a year or more.

I agree.  It's the energy price and the standing charge you should be paying attention to, not the amount of the Direct Debit.  

JJ_Egan

As above never seen any evidence of your claims and been transferring pre MSE .

But i am only interested in the actual prices not estimated DD etc .

rp1974

Reed_Richards said:

dogshome said:

NO

You have both agreed a contract that they will supply you with energy priced at XX a Kilowatt. plus a YY Standing charge for a year or more.

I agree.  It's the energy price and the standing charge you should be paying attention to, not the amount of the Direct Debit.  

I most certainly agree,appalled that many people cant seem to grasp this extremely simple concept..
It's not rocket science is it?,if you use less you pay less,use more you pay more.
Thinking really that for every "problem" energy supplier there's probably many "problem" customers lacking even such basic understanding of that.

Gerry1

The OP does have a point.  If the DD were set at EAC/12 then at times the account will be in debit, typically late winter and spring, and in autumn and early winter it will be in credit.  However, some energy companies tweak the DDs so that the account always remains in credit, and IIRC some even make staying in credit a condition of the contract.

It may not be illegal, but it certainly goes against the spirit of fixed direct debits; if your consumption pattern remains as before, you rightly expect that your fixed DDs will stay the same, so an unexpected increase can be problematic for personal budgeting.  Note that this is NOT a case of the customer wrongly believing that a fixed DD equates to All You Can Eat.

In effect, the offending companies are just using this dodgy practice to boost their cashflow.  In theory it doesn't matter unduly: ultimately you won't pay more: it should all come out in the wash, because if you built up a credit balance you'll be due for a refund after you leave.

However, insisting that accounts must always have a positive balance to boost cashflow has a whiff of Ponzi about it.  We've seem numerous companies go bust and having to be bailed out by a Supplier of Last Resort, drawing upon funding raised by levies on all customers.  Hiking DDs to boost cashflow may allow some companies to offer suspiciously cheap deals, but when these companies fail we all end up paying higher prices.

If Ofgem were any good they'd ban this 'balance must always be positive' practice, but Ofgem have never been any good !

MWT

Gerry1 said:

However, insisting that accounts must always have a positive balance to boost cashflow has a whiff of Ponzi about it.  We've seem numerous companies go bust and having to be bailed out by a Supplier of Last Resort, drawing upon funding raised by levies on all customers.  Hiking DDs to boost cashflow may allow some companies to offer suspiciously cheap deals, but when these companies fail we all end up paying higher prices.

If Ofgem were any good they'd ban this 'balance must always be positive' practice, but Ofgem have never been any good !

That's a bit strong, nothing inherently wrong with requiring a customer not to go into debt.

These are energy companies not banks and they are not in the business of giving customers loans, especially when they have to buy from the wholesale market, mostly in advance of use, not in arrears.

There are companies who seem to be going well beyond not going into debt, and there is a point in looking at them, but you can't say that wanting the balance to remain positive is unreasonable...

FreeBear

JJ_Egan said: But i am only interested in the actual prices not estimated DD etc .

What does annoy me is some companies post their unit & SC rates inclusive of VAT whilst others don't. You then have to sit with a calculator to work out the real rates...

Gerry1

MWT said:

Gerry1 said:

However, insisting that accounts must always have a positive balance to boost cashflow has a whiff of Ponzi about it.  We've seem numerous companies go bust and having to be bailed out by a Supplier of Last Resort, drawing upon funding raised by levies on all customers.  Hiking DDs to boost cashflow may allow some companies to offer suspiciously cheap deals, but when these companies fail we all end up paying higher prices.

If Ofgem were any good they'd ban this 'balance must always be positive' practice, but Ofgem have never been any good !

That's a bit strong, nothing inherently wrong with requiring a customer not to go into debt.

These are energy companies not banks and they are not in the business of giving customers loans, especially when they have to buy from the wholesale market, mostly in advance of use, not in arrears.

There are companies who seem to be going well beyond not going into debt, and there is a point in looking at them, but you can't say that wanting the balance to remain positive is unreasonable...

The original idea of fixed DDs was quite simple, EAC/12 collected each month.  It was accepted that at some times the account would be in credit and at others it would be in debit.  The DD amount would be reviewed at least annually to make sure it reflected the actual usage, but the principle remained the same, i.e. there was no long term 'loan' either way.

Unfortunately, some suppliers abused the system and hiked the DDs so that accounts were always in credit, often by quite significant amounts, and customers complained that they couldn't get it refunded.

This was unfair on customers hit with unexpected DD hikes, as the OP correctly notes.  It's also unfair on competitors who play by the rules because they are placed at a disadvantage.  Worst of all, if a company goes bust with many of its customers having significant credit balances, then we all ending paying a bit more via the SoLR levies.

So it's not a bit strong to say there's sometimes a whiff of Ponzi about it.  Even dozy Ofgem has finally woken up and realised there's a problem, so it must be bad !  They are concerned some suppliers may use customers’ surplus credit balances to fund “otherwise unsustainable business practices”, so they're proposing that energy suppliers should return £1.4 billion to customers in Britain (£65 per household on average) by setting the payments so customers’ credit balance returns to £0 every year on the anniversary of when they started the payments.

QED !

Gerry1

The OP can ask for their credit balance to be returned.

Ofgem states that "If a customer is concerned about the size of their balance, they can ask their energy supplier to refund it. Suppliers must do so promptly, unless there are reasonable grounds not to and they must explain to the customer why."

This is not a proposal, it's the current state of play.