Am I Nuts Still Wanting to Pay Quarterly for Energy?

thedrumdoctor

Call me awkward/obtuse/Luddite - I'll accept them all - but I still like to pay for my gas and electricity by quarterly billing and not direct debit.

When I bought my first house in 1991 I took away with me the horrible ongoing experiences my mum was having with British Gas on direct debit. They estimated her bills and she always overpaid on her DD. This was in the days before switching and getting the money back was a nightmare as they'd insist on using it as credit on her account. Anyway, when I moved out I swore I wouldn't pay an energy company by DD and I haven't done so over the last 30 years.

Once the internet and switching suppliers arrived I got into giving online meter readings at the end of every month and avoided estimated bills. Yes, I missed the discounts for choosing not to pay by DD, but if that's what I had to do to have control over how I paid loathsome energy suppliers then it was money I was prepared to miss.

Coming to the end of a fixed-tariff dual-fuel contract in June, the MSE Energy Club reminded me it was time to switch again. However, this time, the choices were even more limited for quarterly payment deals. It doesn't matter what switching site you go to now, everything is tailored for DD payment and smart meters (I don't have those either). So I've ended up on the cheapest variable tariff I can find which allows me to switch without a penalty fee and bills me quarterly.

But the question is now, with smart meters providing up-to-the-minute readings, are the days of overpaying energy suppliers theoretically over? If that is the case, then perhaps there is no longer the need for me to be the one in control of making sure my energy supplier gets correct meter readings and receives no more cash than they are entitled to?

My current supplier keeps pestering me to fit smart meters but I keep declining their offers. Maybe I should just go with flow and have them installed? At the end of the day, we're all trying to play the game of paying as little as possible to energy suppliers and not becoming their creditors by overpaying  them monthly. I'd be interested in hearing other people's opinions on what they would do if they had a similar mistrust of energy companies and overpaying via DD or if they believe smart meters are a game-changer for the consumer in this area.

Neil_Jones

As a general rule situations of "overpaying" are almost always caused by 1) not providing readings, relying on estimates and then when a reading turns up not learning from it, so the cycle repeats, 2) not being on the cheapest tariff or not bothering to switch at the end date, and 3) using too much energy in the first place.

Most current energy deals/providers work on the basis of either monthly/quarterly billing with monthly direct debit payments into a personal kitty, from which future bills are paid.  The main advantage of this is you pay for the vast bulk of upcoming winter usage before winter arrives, however due to the way the system works it looks like you pay a fortune for very little usage in the summer.

Certain bank accounts will provide credit/cashback to you for direct debit payments to energy providers.  Payments are covered by direct debit guarantees if money goes out when it shouldn't you phone up Dalek Banking and ask for it back.  Providers are available that do not insist on smart meters.

[Deleted User]

Just to be clear, a raised DD payment does not mean that the customer is overpaying. Charges are raised based on tariff and usage and these charges are deducted from the cash held on account.

That said, some suppliers (eg; BG) are offering variable DD payments for consumers who have a smart meter. Billing can be monthly or quarterly. Other suppliers, such as Octopus, allow their consumers to change the monthly DD payment. I have built up a bit of extra credit due to some house improvements and my monthly DD payment is set at £1/month until December.

The DD system isn’t broken. Suppliers are required to notify consumers of any change to the DD payment and there are mechanisms in place for recovering unauthorised payments through the banking system. All consumer credit balances are now fully protected by the Consumer Levy.

PS. Smart meters are not perfect but even when they are not performing as they should they are a non smart meter in all but name.

daveyjp

Up until my last move I have always had pay on receipt of bill tarriffs.  They were always more expensive, but not by a huge amount and for me it worked.

However pay by dd is now the norm and the number of pay quarterly (or even pay monthly from actual readings) tarriffs has reduced dramatically and you will now pay dearly for that option.

My current dd tarriff works out at about £800 a year, when I was looking at pay on bill tarriffs they were all at least £1,000, one was almost £1,200.

Keep a monthly spreadsheet of readings and you know if your dd is at the right level.

apt

I don't find the idea of paying more than I have to or having a very large bill at the end of the winter quarter very attractive. Does the OP still insist on paying his council tax in an annual lump sum rather than 10 installments? 

tux900

Neil_Jones said:

As a general rule situations of "overpaying" are almost always caused by 1) not providing readings, relying on estimates and then when a reading turns up not learning from it, so the cycle repeats, 2) not being on the cheapest tariff or not bothering to switch at the end date, and 3) using too much energy in the first place.

I was going to add '4) Seasonal variation leading to overpayments in the summer months arising from fixed DD payments' but of course there's a flip side to this in that it spreads the additional cost of the winter months over the whole year. I can imagine that for many having a fixed outlay throughout the year is preferable if the winter months would otherwise be difficult to ride out.

daveyjp

apt said:

I don't find the idea of paying more than I have to or having a very large bill at the end of the winter quarter very attractive. Does the OP still insist on paying his council tax in an annual lump sum rather than 10 installments? 

In low use months you are paying more than you have to.

Council tax is different, its a fixed amount and once all payments are made its the end of that bill.  You can't get in debt or in credit.

Issues with direct debits arise where customers pay what is asked, but never check bills, provide readings etc, they get into debt or have a large credit without realising and blame the energy company.

So even with dd keep on top of the bills, provide readings and check the dd is about right.

Neil_Jones

daveyjp said:

Council tax is different, its a fixed amount and once all payments are made its the end of that bill.  You can't get in debt or in credit.

You can actually.  If you miss I think its two debit instalments the whole bill becomes due.  And you can overpay if your council allows payments by BACS or Standing Order if you wanted to - the credit comes off next year's bill.

thedrumdoctor

Well from what people are saying here (thanks for the helpful input by the way), it does seem the wise option would be to go with the smart meters and DD. I guess the smart meters pretty much eliminate the over-billing scenario and there are better measures in place if the DD overpays.

I haven't paid an estimated energy bill since the days of phoning your supplier and entering the meter readings over the phone started. The weak link was always synchronising manual meter readings and DD, which is why I avoided that method of paying bills for any potentially high-value variable payments for 30 years. I guess it's time to change as the parameters are now favourable.

ZaSa1418

I pay monthly but refuse to have smart meters in the home, sending them meter readings once a month is good for me.

JJ_Egan

As above Monthly meter readings and monthly DD , no smart meter as never asked .

DD has increased/ decreased at times over the contracts .