Energy bills go up TOMORROW - meter read TODAY!

Sea_Shell

I've just done some "back of an envelope" * calculations, and it looks like my account will end up almost £700 in credit by next October, if my supplier sets my DD at the correct amount for the new annual projection.

On those sorts of numbers (if not more, as we're below average users) it's going to be very tempting for people to either decide to try and NOT build up that level of credit, or subsequently try and reduce their DD right before next winter.  

But you're going to need that cushion, as that's how level DD's work.   You need to build up credit over the summer to cover winter.

But the level of credit needed this year, is going to seem huge....just sitting there, waiting to be used!!      

So please be aware of this potential "trap" and try not to fall into it. 



* New Annual cost £1700.   Current credit £200.  If we set the DD at £142, but use only (say) £60 worth over the summer months, we'd effectively be "overpaying" during summer by £82 per month, so £492 credit balance plus our existing credit.

EssexHebridean

Really REALLY good advice @Sea_Shell - this is one of the reasons why I don't plan to adjust our DD "yet" - but I will be putting the extra/over amount into savings set aside specifically for paying across later! 

datlex

I worked out my elec for next year based on current cap (one from April).  Utility company are review gas payment so cannot check what they are charging.  As an aside am waiting on a call re solar panels being fitted (I live in area that is getting government funding if you qualify)

moving_forward

I worked ours out but also have had alot of trouble getting our supplier to see that they were under estimating us as they were using the day usage with the night rate and vice versa!
The moral of this tale is don't take your suppliers estimates at face value. Double check them and do your own.  
We were on a fixed rate until end Feb and annual cost was £958.74 /£80 per month.
Now we are on variable rate from April annual cost will be £1,976.57
The calculations are in case anyone's interested:

KWH USAGE DAY RATE S/C TOTAL day 2184  £0.30   £653.56  night 1118  £0.21   £239.12  total  3302  £892.69   £0.48   £174.99   £1,067.68  gas 11000  £0.07   £809.66   £0.27   £99.34   £908.99   £1,976.67   £164.72
If you turn mobile horizontal it should tidy up the columns

moving_forward

It's also worthwhile doing a similar calculation with fuel if you drive. 
Find out cars MPG - most modern cars have a computer that tells you.
Divide by 4.546 this then gives you miles per litre.
Divide the price of fuel by this number to give you cost per mile. I calculated ours at approx £0.17 per mile. I know how many miles we need to get to work and back and now I know how many we can use for other things if we want to stay in our £35 per week budget.

EssexHebridean

Good tip on the vehicle fuel costs too! We’re currently adopting topping ours up more frequently as prices are increasing so rapidly. Normally we wait until a bit below quarter of a tank but right now it doesn’t seem sensible to wait. MrEH filled his up (diesel) last Sunday at 154.9ppl - at the same petrol station yesterday mine was at 165.9. Ouch. 

One further thing I’d suggest now on gas/electric. EVEN if you are currently on a fix, if that fix is expiring at ANY time inside the next year,  sit down right now and work out your likely costs when the fix expires. Use the current cap prices (available for most suppliers now) and personally I’d add a further 50% increase to those. October’s rise “may” not be that much, but it’s impossible to say right now. At least once you know the likely costs, you can start to budget - and stash money aside - ahead of time. It’s scary, but it’s also definitely better to know. 

Sea_Shell

Just to make the point again about DD's.

Here's an example calculation, that I've just posted in another thread, which hopefully will highlight what will happen if you try and keep your summer DD artificially low.


Annual estimated cost £2000
Monthly DD should be £166, level throughout the year.
Over summer (6 months) you only pay a DD of £80 (which may cover summer usage), but £86 "short", each month
This means you'll have paid £480, towards your annual bill of £2000
This leaves a balance of £1520, to be paid over the remaining 6 months (high winter usage)
DD now has to be increased to £253 to make up the shortfall. 

TheAble

It's a valid point. But on the other hand, the overall cost is the same. And I'd rather have the money in my own bank account than in that of the utility company.

EH makes the point that your money is protected even in the event of company default, and for all this may be correct, the issue I had with my own now defaulted company was that before they went under they started producing some wildly erroneous bills which would have significantly wiped out any credit I had with them. Fortunately I was in debit before this happened, as otherwise I'd have had a real hassle getting my money back.

After they went into administration the ombudsman was unable to help.

I'm with a reputable firm now and don't plan to reduce my payments but in a general sense I'd caution against building up large credit balances.

Sea_Shell

TheAble said:

It's a valid point. But on the other hand, the overall cost is the same. And I'd rather have the money in my own bank account than in that of the utility company.

EH makes the point that your money is protected even in the event of company default, and for all this may be correct, the issue I had with my own now defaulted company was that before they went under they started producing some wildly erroneous bills which would have significantly wiped out any credit I had with them. Fortunately I was in debit before this happened, as otherwise I'd have had a real hassle getting my money back.

After they went into administration the ombudsman was unable to help.

I'm with a reputable firm now and don't plan to reduce my payments but in a general sense I'd caution against building up large credit balances.

The wider point is that this thread is on the "debt free wannabe" part of the forum, where people may not be able to budget and put that money to one side without being tempted to (or having to) dip into it for other reasons.

We're just trying to get people to engage with what's around the corner.

At the end of the day, everyone will handle the coming situation differently, but there are "dangers" that we're trying to make people aware of. 

RosaBernicia

It's worth doing the sums in order to have a plan, whatever you decide to do with the location of the credit/ savings - the main point is to avoid it coming as a shock. 

Personally I'm going to allocate the money in YNAB, and see how my usage pans out.  If I end up with a lot of credit I may ask for some of it back or reduce the DD so that it can sit in Premium Bonds instead til the winter.