Why in UK the DD amount is constant figure?

izawa

Maybe it's my lack of knowledge but why in UK we have a system where our energy bill payments are not exact like in so many other countries?

I understand that the amount is estimated and spread over a year. Any overpayment/underpayment is settled towards the end.

Even with smart meters, our bill payments are still constant. The suppliers may decide to alter the amount mid year but it is never exact.

What I am trying to find is whether there was any historical reason in doing so? Perhaps, it could be due to avoid surprises to people if the bills were exact and made sense to spread over a year.

Ebe_Scrooge

izawa said:

What I am trying to find is whether there was any historical reason in doing so? Perhaps, it could be due to avoid surprises to people if the bills were exact and made sense to spread over a year.

It's probably down to pure practicalities.  To generate an exact bill would mean a meter reading would have to be submitted immediately prior to the bill being produced.  That's either a whole load of labour costs in sending out thousands of meter readers, or else relying on people to submit their own reading on exactly the right day - neither of which is realistically practical.  Yes, if everyone had a smart meter, it could probably be done, but the simplest and most cost-effective way is just to work out the average yearly consumption for your property and divide by 12 - adjusting, as you say, when the estimate is shown to be incorrect.

marcia_

 If you regularly send meter readings there are no estimated bills 

BUFF

most suppliers give you the choice of fixed or variable DD - you choose what you prefer.
For people like me that use 90% of their gas over 6 months & about 2/3 over Dec/Jan/Feb it smooths out payments & avoids the highest bills at the same time as Christmas etc.

izawa

marcia_ said:

 If you regularly send meter readings there are no estimated bills 

I have a smart meter yet get fixed bills, excess amounts are settled during final bills.

Mstty

You can asked to be put on variable bills if you want to.

However most don't realise with the October price cap rise incoming and the fact it is now summer time your usage could be £60-100 now but £240-400+ per month in winter and for us the big bills in winter would not be a good thing.

MWT

izawa said:

Maybe it's my lack of knowledge but why in UK we have a system where our energy bill payments are not exact like in so many other countries?

This is not just a UK thing, 'level billing' is available in other countries as well.

If you don't want to do it this way then use one of the other options like variable DD which will pay the entire bill each month automatically, or a standard credit account (often more expensive) where you pay on receipt of the bill.

Gerry1

Back in the days of the Electricity and Gas Boards your meter was read by a meter reader and you were sent a quarterly bill.  You probably paid it at the Electricity and Gas Board shops in the High Street.  There was no choice of supplier and no such thing as dual fuel. And that was that.  You even had to buy your gas cooker from the Gas Board.

Privatisation / liberalisation meant that you had a choice of supplier, the high street shops disappeared and payment became remote and Direct Debits were promoted to save costs.  Uniquely, fixed DDs became the norm: Variable DDs were offered by some but not all suppliers, and they were seldom promoted, the default was always Fixed DD.

Originally the idea was that sometimes you would be in credit and sometimes you would be in debit, but Fixed DDs soon became a cash cow.  Many smaller companies used Fixed DDs to finance their business growth, sometimes even even taking the first payment before commencement of supply.  Dozy Ofgem turned a blind eye, and the bubble burst when 30 companies went bust in little more than a year.  Citizens Advice were highly critical of Ofgem's inaction, as was the recent report than Ofgem commissioned.

IIRC Variable DDs are offered by many of the remaining suppliers, including British Gas, Shell Energy, E.On, EDF, SO Energy, SSE, Octopus and Ecotricity, probably Scottish Power, but apparently not E.On Next.

TheMilkmansDad

izawa said:

marcia_ said:

 If you regularly send meter readings there are no estimated bills 

I have a smart meter yet get fixed bills, excess amounts are settled during final bills.

do you mean fixed DD amount rather than fixed billed amount?

izawa

TheMilkmansDad said:

izawa said:

marcia_ said:

 If you regularly send meter readings there are no estimated bills 

I have a smart meter yet get fixed bills, excess amounts are settled during final bills.

do you mean fixed DD amount rather than fixed billed amount?

Fixed DD amount

pochase

Just contact your supplier and request to go onto variable direct debit, takes only a few minutes.

In general fixed direct debit order is "better" for people who are not able to pay the higher winter bills and are not good at budgeting for them.

If you either know how to debit and/or don't have a problem to pay higher bills variable direct debit is the way to go.