Why in UK the DD amount is constant figure?

Mstty

@oliverbrown I disagree I already knew how to work out a bill before joining this forum. Key to monthly expenditure planning.

It was however a great surprise how many people didn't know these simple calculations and yearly usage in kWh. 

In my opinion education on this is the way to safely stop energy companies over inflating customers DD's giving the knowledge and control to the customers.

Gerry1

pochase said:

oliverbrown said:

Ultrasonic said:

With growing number of people likely to end up struggling to pay bills I think that would be a terrible idea personally.

No reason the two systems can't coexist, for people who struggle financially a fixed monthly direct debit could of course be preferable and should be available. It's more about shifting emphasis towards a model that doesn't encourage energy suppliers to inflate direct debits.

You were asking that the variable rate should be the default.

And in this case exactly what Ultrasonic fears would happen. The people who are struggling are not the often the people who would even realise the problems of a variable debit order or put any thought into it. Many of them will be very happy in summer that there is money left and spend it, and will not be able to pay in winter.

That's just a wee bit patronising IMHO.  People who happen to be poor aren't necessarily stupid and / or feckless.

pochase said:

oliverbrown said:

Ultrasonic said:

With growing number of people likely to end up struggling to pay bills I think that would be a terrible idea personally.

No reason the two systems can't coexist, for people who struggle financially a fixed monthly direct debit could of course be preferable and should be available. It's more about shifting emphasis towards a model that doesn't encourage energy suppliers to inflate direct debits.

We already have a system that allows both types of direct debits, and I personally think it is the right thing that you have to request the potentially disastrous variable debit order.

Not sure that's always the case now, and it certainly wasn't when we had around 70 domestic suppliers: many refused to offer Variable Direct Debit.  Fixed Direct Debit can be equally disastrous: with estimated readings and quarterly or six monthly statements you can easily build up a serious shortfall.  Virtually every week there's a wail from a newbie stating that they had a Fixed DD for £x per month and it's suddenly rocketed to £2x or £3x.
Edit: Sure enough, even while typing @Rbird1 reports that their Fixed DD has increased from £105 to £236 !

At least with a Variable Monthly DD you're soon alerted to unexpectedly high usage and can cut down, whereas with a Fixed DD it may well be too late because the damage has been done and you have to pay back the arrears as well as paying more every month.

oliverbrown

Gerry1 said:

At least with a Variable Monthly DD you're soon alerted to unexpectedly high usage and can cut down, whereas with a Fixed DD it may well be too late because the damage has been done and you have to pay back the arrears as well as paying more every month.

True, that's the less talked about side effect of fixed direct debits, when it is set too low.

The overinflated direct debits were being used to line the pockets of directors rather than being used to hedge, a practise we are all paying the price for now.

I don't believe leaving it down to customer education is acceptable, people have other things to worry about and there should be an expectation when they sign up for a supplier that there are systems in place to make sure they are not being taken advantage of. Prioritising a system which means they pay for exactly the amount of energy they used in arrears is one potential way.

BUFF

pochase said:

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.

In your opinion & it may well be your preference and/or suit your energy consumption pattern.

I can both budget &, luckily, am in a position to pay higher bills but my preference given my energy consumption pattern (& other expenditure at the year end) is to smooth out the bills over the year.

Imo, choice is better than prescription. Knowledge/data & understanding are the keys to making the choice that suits individuals best.

Thrugelmir

oliverbrown said:

With all the fuss about energy suppliers using overinflated direct debits, perhaps Ofgem could consider mandating energy suppliers to make whole bill variable direct debit the default option.

Then the energy companies will return to the days of employing lots of people to administer delinquent accounts. A cost that then falls on those that pay without fail. Budgeting is a skill that many people lack. 

RogerBareford

Mstty said:

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.

But why would it make any difference when you pay the bills if you know your usage and your able to budget?

Section62

oliverbrown said:

Section62 said:

As energy costs have crept up, providing up to three months of credit has become increasingly expensive for the energy co's, and for start-ups it could be a prohibitive barrier.

I suspect going forward, making things harder for start-ups will be seen as a good thing, owing to the practises of many failed start-up energy suppliers.

I'm not sure how much of a good thing that would be.  Certainly for the many MSE members who switched to start up compaines and got the benefits of cheaper rates, better customer service, and/or innovative products.

Ofgem do need to look at better regulation to ensure smaller energy suppliers are more financially stable, but requiring them to give customers up to three months (free) credit on their bills is unlikely to achieve this either.

Gerry1

Thrugelmir said:

oliverbrown said:

With all the fuss about energy suppliers using overinflated direct debits, perhaps Ofgem could consider mandating energy suppliers to make whole bill variable direct debit the default option.

Then the energy companies will return to the days of employing lots of people to administer delinquent accounts. A cost that then falls on those that pay without fail. Budgeting is a skill that many people lack. 

That's far more likely to be the case with Fixed DDs when usage turns out to have been higher than estimated.  Several months' underpayments may have accumulated by the time the six-monthly review kicks in, whereas with Variable DDs it's apparent after only a month.

Section62 said:

oliverbrown said:

Section62 said:

As energy costs have crept up, providing up to three months of credit has become increasingly expensive for the energy co's, and for start-ups it could be a prohibitive barrier.

I suspect going forward, making things harder for start-ups will be seen as a good thing, owing to the practises of many failed start-up energy suppliers.

Ofgem do need to look at better regulation to ensure smaller energy suppliers are more financially stable, but requiring them to give customers up to three months (free) credit on their bills is unlikely to achieve this either.

Well, the simple answer is that Ofgem should make VMDD the default, with FMDD as an option !  To reduce the burden on the suppliers, the standing charge could be billed in advance, as with telephone line rental.

QrizB

Gerry1 said:

Well, the simple answer is that Ofgem should make VMDD the default, with FMDD as an option !  To reduce the burden on the suppliers, the standing charge could be billed in advance, as with telephone line rental.

 A case could even be made for the default to be smart metered prepayment, like a PAYG mobile account.

The system now exists and it would give consumers full control over their bills, plus prevent suppliers financing their businesses with other people's credit balances. New entrant suppliers could be restricted to prepayment only until they've demonstrated a sound financial footing to Ofgem's satisfaction.

(I'm now waiting patiently for the tinfoil-hat brigade ...)

Section62

Gerry1 said:

Well, the simple answer is that Ofgem should make VMDD the default....

....after somebody sorts out the smart meter fiasco to enable it.