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

MattMattMattUK

wrf12345 said:

For online accounts increases in DD should only happen after the customer has given permission, or at least have the opportunity to reject such a request without needing to spend an hour getting access to a chat line - energy companies love the illusion that they have control of your bank account. I suspect a large cohort of customers have radically reduced their electric consumption and turned off their gas at the meter - very green but a disaster for companies trying to recover all the money they lost in the prior six months - and therefore no need for an increase in DD.

Increasing the Direct Debit is of no real benefit to large suppliers, it is not profit so they cannot issue it as dividend, it sits on the books as a liability. The problem with a system where the customer gets to reject any increase is that due to many people having a poor understanding of the cost of energy and how billing works they are likely to reject almost any rise leading to a situation where the energy providers need to use a large amount of customer service resources trying to explain to people, and people running up debts which then need to be dealt with by further increased Direct Debits. 

wrf12345 said:

On another note, I have written to my MP to point out the outrageous increase in s/c's on the electric bill that cause a disproportionate percent increase for low energy users and have demanded that the responsible Ofgem employees are sanctioned for such abuse of energy customers and their ignorance of encouraging low energy use.

The increase in electricity standing charges is entirely sensible, it covers the cost of network provision and other associated fixed costs, with the unit cost of energy designed to reflect the cost of supply per kWh. What you are "demanding" is that low users are subsidised by middle and high users, that is irrational and unfair, especially as some of the highest users of energy are often the elderly and disabled on fixed incomes.

Sea_Shell

MattMattMattUK said:

wrf12345 said:

For online accounts increases in DD should only happen after the customer has given permission, or at least have the opportunity to reject such a request without needing to spend an hour getting access to a chat line - energy companies love the illusion that they have control of your bank account. I suspect a large cohort of customers have radically reduced their electric consumption and turned off their gas at the meter - very green but a disaster for companies trying to recover all the money they lost in the prior six months - and therefore no need for an increase in DD.

Increasing the Direct Debit is of no real benefit to large suppliers, it is not profit so they cannot issue it as dividend, it sits on the books as a liability. The problem with a system where the customer gets to reject any increase is that due to many people having a poor understanding of the cost of energy and how billing works they are likely to reject almost any rise leading to a situation where the energy providers need to use a large amount of customer service resources trying to explain to people, and people running up debts which then need to be dealt with by further increased Direct Debits. 

wrf12345 said:

On another note, I have written to my MP to point out the outrageous increase in s/c's on the electric bill that cause a disproportionate percent increase for low energy users and have demanded that the responsible Ofgem employees are sanctioned for such abuse of energy customers and their ignorance of encouraging low energy use.

The increase in electricity standing charges is entirely sensible, it covers the cost of network provision and other associated fixed costs, with the unit cost of energy designed to reflect the cost of supply per kWh. What you are "demanding" is that low users are subsidised by middle and high users, that is irrational and unfair, especially as some of the highest users of energy are often the elderly and disabled on fixed incomes.

I wonder how many people would reduce their DD to almost nothing, given half a chance?

"£10 a month...yes please...that covers everything, right?"

Abella12

I have just moved house and have been on the variable rate which I decided to do for the time being. I spoke to EDF today , said I wanted monthly paper bills which they were fine about. Their best year fixed until 2024 was £2600. I am staying on the variable rate ( yes I know it's variable and things will change in October). I gave them correct readings today and gas and electric was total of £101 for my first month here but if I set up a DD on the variable rate they wanted a monthly payment of £220 ? Why do people not request monthly paper bills to avoid overpaying these companies which is clearly a ploy they have adopted according to new reports. I live in a large bungalow with my partner and son and want to pay for what we use not a figure they pluck out the air.

Alnat1

The amount you have used over this last month is likely to be quite low, lighter evenings, heating off or being used much less. Over the colder, darker months of winter you will use much more gas and electricity.

The direct debit amount the company is asking you to pay is 1/12th of what they expect your annual bill to be and I'm inclined to think the amount they are asking won't be too far out.

Whether you have a paper bill or only seeing it online will make absolutely no difference to the amount you need to pay.

QrizB

Abella12 said:

I am staying on the variable rate ( yes I know it's variable and things will change in October). I gave them correct readings today and gas and electric was total of £101 for my first month here but if I set up a DD on the variable rate they wanted a monthly payment of £220?

It sounds as though you are paying monthly in arrears by cash/cheque. If so, you are now paying a higher tariff than you need to.

If you wish to pay monthly it should ideally be by variable DD, which gets you the DD tariff.

You can see EDF's standard variable rate card here. The cash/cheque tariffs are all somewhat higher than the equivalent DD ones.

facade

DD increased from £39 to £334 shock investigation!

Turns out he wasn't even paying for his electricity, and now he is all-electric.

(Seems about right to me, electricity is about 8x what the unit price of gas was pre-April cap, plus his previous electric usage.)

Note the advice to query it if your DD increases by more than 54%. No wonder customer service is swamped, and we get the current situation.

https://www.which.co.uk/news/article/my-energy-direct-debit-is-being-increased-by-more-than-300-per-month-is-it-right-avqOA7p3nxYm

Sea_Shell

Quote of the day, seen on BBC comments section...

"Wonder when we will find out they were using Horizon software to calculate our direct debits?"

  

GingerTim

facade said:

DD increased from £39 to £334 shock investigation!

Turns out he wasn't even paying for his electricity, and now he is all-electric.

(Seems about right to me, electricity is about 8x what the unit price of gas was pre-April cap, plus his previous electric usage.)

Note the advice to query it if your DD increases by more than 54%. No wonder customer service is swamped, and we get the current situation.

https://www.which.co.uk/news/article/my-energy-direct-debit-is-being-increased-by-more-than-300-per-month-is-it-right-avqOA7p3nxYm

This from the article doesn't seem helpful either, implying the maximum anyone can be charged per month is £250:

At the time of writing none of Octopus' current fixed rate tariffs are more than £250 a month, which is for the highest-demand uses.

Bendo

QrizB said:

facade said:

"Substantial fines"

So struggling energy suppliers who have raised DDs in an effort to generate some cash to get through another period of selling below what they buy at will have to pay out, making collapse more likely.

There are many ways for a viable business to raise capital. Borrowing it from their unwitting customers should not be one of them.

Is domestic energy supply a viable business with legislation in place to sell the product below cost?

prowla

In my case I've shifted from a failed provider and I think it's acceptable for there to be a settling-in period for payment amounts to stabilise.

In my case my new provider recommended a new payment amount and I went with it; I'll take stock and see if it's right.

The thing which isn't right, though, is allowing the vendors to engage in profiteering.

Raising the cap to allow price increases (of course they are going to raise prices right up to the cap) whilst the cartel of companies are posting record profits cannot sit squarely with the role of a regulator having a duty to the public.

The idea too that standing charges have to be increased to pay for something which isn't part of the standing service is just plain skulduggery.