Energy firms face 3 week deadline in review of direct debit hikes

brewerdave

daveyjp said:

I know for many its a simple calculation to work out the estimated annual cost divided by 12 to get a monthly debit, but for just as many it isn't.

Do suppliers have to provide the full analysis of how the direct debit is calculated?

My personal experience ? No ,they don't - haven't been shifted recently to BG THEY can't even explain how it's calculated LOL

wild666

With a DD if your credit still increases in the winter months then your DD is more than the energy you are paying for. The only time a DD should increase the credit balance is in Summer and it decrease in winter by around one sixth of the credit balance, maybe less at the start and end of the winter months with the majority taken around November to February. 

MattMattMattUK

facade said:

MattMattMattUK said:

With regard to the article itself, some suppliers have undoubtedly raised the monthly payments too high for some customers, but many of the complaints of hugely increased Direct Debits are not actually an issue with the amount being increased excessively,. but people not understanding the significant increases in energy costs we have already had, combined with the Direct Debits being raised to cover the next twelve month period which will include a 25-50% increase in October. 

In my case, my DD has increased 100%, and judging by this months figures, it might not be quite enough.

My overpayment in April was only £25!. Based on last years consumption, it will put me on an underpayment of £65 pcm  throughout the Winter. (I'm on a fix), and an overpayment of £75 in August. 

With the £400 loan it will work out, but I'm hardly subsidising Octopus.

Similar for me, my very good EDF fix comes to an end at the end of the month, I currently pay £70, EDF have said that they want to raise my monthly Direct Debit to £120. Even accounting for the £200 loan-not-loan I estimate that my Direct Debit would need to be closer to £145 to account for the unit cost increase when my fix ends and the further October price increases. 

It certainly does not look like a universal money raising scheme to me, I suspect more to do with different usage patterns, people on estimated readings and potentially SoLRed customers without a full year's data. 

Gerry1

MattMattMattUK said:

Chrysalis said:

Beat me to it.

So Ofgem and the Ministers have caught on, fines threatened.

All we need now is Ofgem to promote Variable DD as an option to raise customer awareness.

I really do not see this as a solution. Whilst it is fine for people like us who are competent at budgeting it can be evidenced by many of the people raising issues on here, commenting in the media etc. that the finances would be even more of a mess if they had to account for a payment that varied significantly throughout the year.

The key word is OPTION.

If people really can't budget then they can stay with Fixed DD.  And then no doubt there will still be dozens of posts every week wailing that 'Dodgy Energy signed me up to a tenner a month fixed tariff, but now they want to hike it to £100 !'

It's really quite simple: all suppliers should be obliged offer Variable DD.  It should be the default, but customers should be able to opt for Fixed DD if they can't budget for themselves, having been firmly warned that it's never All You Can Eat.

wakeupalarm

If the energy companies end up being fined, will they pass the cost on to consumers?
If not and it affects their profit margins, will they become at risk of collapse?
If so and based on what happened last year, should we make sure we cancel our DD or at least change to pay on receipt of bill?
Would it be wise not to build up a high credit balance with a energy company in case they do collapse and then have to wait half a year to get our money back?
Will we then have to pay increased cost due to SOLR process?
Will there be any energy companies left?

Sea_Shell

wakeupalarm said:

If the energy companies end up being fined, will they pass the cost on to consumers?
If not and it affects their profit margins, will they become at risk of collapse?
If so and based on what happened last year, should we make sure we cancel our DD or at least change to pay on receipt of bill?
Would it be wise not to build up a high credit balance with a energy company in case they do collapse and then have to wait half a year to get our money back?
Will we then have to pay increased cost due to SOLR process?
Will there be any energy companies left?

And what do you think the outcome would be if everyone did that?

facade

wakeupalarm said:

If the energy companies end up being fined, will they pass the cost on to consumers?

Obviously they will. They are hardly going to pay out of their own pockets.

wakeupalarm said:

will they become at risk of collapse?

Depends on the substantialness of the fines, cashflow is tight at the moment.

wakeupalarm said:

If so and based on what happened last year, should we make sure we cancel our DD or at least change to pay on receipt of bill?

They can charge more for this, it is called standard credit, and the cap is about 6.5% higher.

wakeupalarm said:

Would it be wise not to build up a high credit balance with a energy company in case they do collapse and then have to wait half a year to get our money back?
Will we then have to pay increased cost due to SOLR process?
Will there be any energy companies left?

All yes.

Someone has to supply energy. You would think that a single state run entity, without duplicating layer upon layer of profiteering middlemen could do it cheaper than private companies, but for some reason I don't understand this apparently isn't the case...

k_man

Gerry1 said:

MattMattMattUK said:

Chrysalis said:

Beat me to it.

So Ofgem and the Ministers have caught on, fines threatened.

All we need now is Ofgem to promote Variable DD as an option to raise customer awareness.

I really do not see this as a solution. Whilst it is fine for people like us who are competent at budgeting it can be evidenced by many of the people raising issues on here, commenting in the media etc. that the finances would be even more of a mess if they had to account for a payment that varied significantly throughout the year.

The key word is OPTION.

If people really can't budget then they can stay with Fixed DD.  And then no doubt there will still be dozens of posts every week wailing that 'Dodgy Energy signed me up to a tenner a month fixed tariff, but now they want to hike it to £100 !'

It's really quite simple: all suppliers should be obliged offer Variable DD.  It should be the default, but customers should be able to opt for Fixed DD if they can't budget for themselves, having been firmly warned that it's never All You Can Eat.

I suspect those that can't budget, aren't financially savvy enough to understand the difference between the 2, and so choose appropriately.
Or chose the cheaper today option, and makes thing worse come winter 

molerat

Gerry1 said:

It's really quite simple: all suppliers should be obliged offer Variable DD.  It should be the default, but customers should be able to opt for Fixed DD if they can't budget for themselves, having been firmly warned that it's never All You Can Eat.

And monthly billing should be the default.  This "6 month review" nonsense should not be allowed, a recipe for disaster and  massive DD hikes.

facade

Gerry1 said:

It's really quite simple: all suppliers should be obliged offer Variable DD.  It should be the default, but customers should be able to opt for Fixed DD if they can't budget for themselves, having been firmly warned that it's never All You Can Eat.

I agree they should offer variable DD, but as I said in another post, it would make the account standard credit if the DD is calculated after the energy is used, how could they calculate it before?

I really can't see a problem with fixed monthly DD. I use it, and I am quite capable of budgeting.

How I would budget is to estimate the energy bill for the year, divide it by 12 and then put the difference between the Summer monthly bill and the 1/12th aside ready to fund the deficits in Winter.

Which is overall the exact same thing as fixed monthly DD- except I have to not spend the accrued float, and it hurts a lot more to pay out for a big bill in Winter.

There are a lot of people who effectively live hand to mouth, and anything left in their bank account at the end of the month is theirs to spend. So if they "find" £100 they spend it straight away on sweets and beer, not questioning for a second where it has magically come from, and when the delayed standing order/DD goes through they go into the red and are hit with charges, or it bounces and they are hit with charges. Trust me, they could never build up a float to pay the Winter bills.