Energy companies creaming interest of customers credit balances

MMaca

Hi, how many other people are fed up contacting their energy company to ask them to stop increasing your monthly direct debit when you have a credit balance on your account? If you think of a mid to high size energy company with say 1million customers. Say 60% have built up a credit balance of around £50. That is 30 million that the energy company has which is customers money. Then think about the interest they are getting back on that balance.
I have now contacted my energy company twice in the last 2 months due to them trying to increase my monthly payment when I am sitting with an £83 credit and their own projection for the year is that,  I will use £643 based on last year. My direct debit is for £51 per month. If you work it out that £83 credit will last me nearly 2 years if prices don;t come back down but all the time they have that credit, they are getting interest on that money.
I really feel its time that more safeguards were put in place by OFGEM to protect consumers from overpaying and feeling like they can't do anything about these recurrent increases to their Direct Debit.  I was only offered a 2 month suspension of increase!! The vast majority of users pay their Direct Debits on time but I believe these companies take advantage of that and are knowingly slowly increasing your DD's to create a credit balance on your account from which they are benefiting.

emmajones1976

You think they are doing it to cream interest? Have you taken a look at savings interest rates lately?

wakeupalarm

Its not to cream interest, have a look here.

https://www.dailymail.co.uk/news/article-10024511/How-Avro-Energy-propped-advanced-customer-fees-went-bust-gas-prices-spiked.html

MMaca

work out the interest on that amount even at bank rates, it's significant,  but I would think they don;t keep it in the bank, it will be in investments  which has a much higher return, plus tax dodge if done correctly. I don't believe we should be paying more than we are using. They already have near £100 of my money. I only actually use about £45 a month in winter and am paying £50p/m on top of the credit balance. Plus they are basing their projections on last years cost when everyone was in lockdown and using a hell of a lot more electricity than they are now. My units used only changed during lockdown for about 6 months when my children moved back home as one was shielding and living in a high risk area, and the other when Uni closed. It's just me now and I hardly use anything. Therefore I am pretty sure they should not be increasing my DD until I have got close to using my credit balance!

Verdigris

You do know you bill will be going up about 50% when your fix ends and again in April when the cap is next fixed?

You might be glad of a bit of a buffer.

MMaca

Liking the Article about Avro. Proves my point, but they were pocketing it and now lots of customers can't get their credit balances back! I'll bet the owners aren't struggling to pay their bills unlike many other families on much lower incomes. This is what I mean, how can a firm like Avro get an award, yet once its transparent about their working practices, you realise they were were creaming the money by passing it through their subsidiary companies.

MMaca

I don;t have a fixed rate so am paying the top whack at the moment. Its just electricity for appliances. My heating is not electricity or linked to electricity.

[Deleted User]

MMaca said:

Liking the Article about Avro. Proves my point, but they were pocketing it and now lots of customers can't get their credit balances back! I'll bet the owners aren't struggling to pay their bills unlike many other families on much lower incomes. This is what I mean, how can a firm like Avro get an award, yet once its transparent about their working practices, you realise they were were creaming the money by passing it through their subsidiary companies.

All consumer credit balances are now 100% protected by the Ofgem Consumer Levy. Prior to 2018, consumers would have become unsecured creditors of the failed supplier. Whether or not, any supplier has been acting illegally is probably best left to the various Regulators.

PS. Don’t believe everything you read in newspapers. They usually have an agenda and reporting is often short on facts.

MMaca

OK but it doesn't answer my question on mine and others situations. I am not even using the 50.91 that I am being charged. My unit price is 21p. It used to be 14p before everything went crazy, so that is a 66% rise already. I am still loads in credit compared to what I use. Its one thing asking someone to pay more, it's something else changing the DD so they do pay more. We should only pay for what we use.

Verdigris

There seems to be a veritable swarm of new posters pointing out, in colourful terms, the evil nature of utility companies. It's almost as if they been reading some nonsense on Facebook. (other sources of misinformation are available)

MWT

MMaca said:

We should only pay for what we use.

... and you can do just that with many suppliers if you want, but it will be a slightly more expensive tariff.

The problem is that many people want the absolutely lowest price possible, but do want the 'payment in advance' system that goes with it, along with the fragility of the small suppliers that have been under-pricing to build customer base and generate working capital...

So do please go to a supplier that allows you to have a normal credit account and payment on receipt of your bill, SSe was one that still allows that for example, but don't expect to pay the lowest prices as well as having a full credit facility...

The real problem here though is not the process of payment in advance, nor even the loading of the payments to be higher in winter than in summer, it is the use of inaccurate estimates instead of following the meter readings...

If that part is fixed, there is no need to change the DD advance payment method as the actual payments would reasonably follow the actual usage and large balances would not be built up.