Why in UK the DD amount is constant figure?

Thrugelmir

Gerry1 said:

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.

A system has that has worked well for decades. Why change it.  Now there's panic over very little. With the media and social media responsible for much of it. The uninformed leading the uninformed. 

badmemory

Well I certainly wouldn't pay by variable direct debit to British Gas.  Despite me giving them the readings monthly the last bill they finally managed to produce was for 3.5 months.  Their systems are an absolute joke.

Spoonie_Turtle

Mstty said:

By educating people to talk in kWh and not monthly amounts is the only way. @oliverbrown

Only when armed with kWh usage can you reasonably discuss and set rates with energy suppliers.

It seems to me that Ofgem setting the energy cap based on monetary amounts for an 'average usage' that doesn't apply to a large amount of the population, and all of the public discussion about it also being in the same terms, really doesn't help here.  Monthly/annual amounts are necessary as context for how big an impact different unit rates and standing charges will have, but just as comparison in a supermarket relies on unit amounts to enable people to make informed decisions, so too does energy comparison.  It's not a difficult concept, but people do need to know about it.

oliverbrown said:

Mstty said:

By educating people to talk in kWh and not monthly amounts is the only way. @oliverbrown

Only when armed with kWh usage can you reasonably discuss and set rates with energy suppliers.

The reality is, the vast majority of people are not going to analyse their energy bills and usage to the degree we do here. Banking on that principle as a solution is not a viable way to prevent energy suppliers from industrial overinflation of monthly direct debits.

I'm a newbie to this board, not particularly savvy At All, but thanks to the Cheap Energy Club realised a few years ago that when comparing suppliers and tariffs the only way to properly compare is to use unit prices (and standing charge).  The rates of usage are on everybody's bill, it's not difficult to find, so a bit of basic education would go a long way.

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FWIW we're with Octopus who set a monthly amount but give us the ability to change it whenever we like and as frequently as we want.  I don't know which model that is (well, obviously not actually fixed but I don't know if it comes under VMDD either, I don't have enough experience to know).

We send a meter reading every month and they bill us based on that - although we can send meter readings whenever and however frequently we want as well - and if we are late or miss a reading they simply bill us based on an estimated amount, which I assume is likely to be much more accurate than an estimate based on less frequent meter readings.

Gerry1

Thrugelmir said:

Gerry1 said:

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.

A system has that has worked well for decades. Why change it.  Now there's panic over very little. With the media and social media responsible for much of it. The uninformed leading the uninformed. 

@Thrugelmir In what way am I uninformed?  Citation required !

FMDD hasn't worked for many people, as all the 'Why has my Fixed DD increased?' posts on MSE clearly demonstrate.  And I'm not wanting to end FMDDs, only to make all suppliers offer VMDDs, not merely some of them.  No-one would be forced to have a Variable DD.

Mstty

QrizB said:

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 ...)

Well now you have proceeded any different view to yours as being laughable, paranoid, crazy and in the minority "tinfoil-hat brigade" that really does not lead to a good discussion.

Mstty

RogerBareford said:

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?

Hey Roger

No it wouldn't make a difference to us just the way it's been since we started paying for our own energy and it worked very well in the early days when pennies were tighter than they are now having a monthly amount that didn't change through the year.

Funnily enough due to the failure of Symbio and me cancelling the DD with them as they tired to double the payment 1 day before going down the pan (cheeky monkeys) it was three months til my new DD started with Eon Next. Normally every summer we accrue a credit that the energy company have in their pocket but due to the above we are in debit which will clear into a small £15 credit by October (our first year anniversary with Eon Next). So as we are fixed into them for two years there won't be any credit funds for them to have in summer as now our year runs Oct to Sep. 

Anyway back to the question you raised for probably 60-70% of people having a solid DD amount each month is better than massive bills in winter for their personal budgeting so I don't mind that being the default and to have the option of variable if you want.

doodling

Hi,

A fixed direct debit arrangement is effectively a financial product and really shouldn't be sold by energy companies.

My strong preference is that energy companies do daily variable direct debits (based on smart meter reads) with an automatic switch to prepayment once a certain direct debit failure rate is reached.  That way no-one gets into debt.  The only issue is whether the direct debit payment infrastructure could handle the volume of payments.

If people want fixed direct debits then I'm sure that finance companies (not energy companies) would provide a product that achieved that (a bank account would work!).

agentcain

I, for example, opted to have a VMDD with BG. I had to request it via chat though as they conveniently would not allow it through my account, only FMDD was allowed. These are practices that the ofgem should look out for if it was half as competent as advertised. 

oliverbrown

Thrugelmir said:

A system has that has worked well for decades. Why change it.  Now there's panic over very little.

Very little? FMDD was the cornerstone of corrupt directors getting rich from overpayment for energy, and walking away scot-free when their companies collapsed, leaving every billpayer paying for the consequences.

Gerry1

Quite apart from the problems caused by suppliers using inflated Fixed DDs to fund Ponzi schemes, it's often overlooked that it can take many months for an amount equal to the credit to be applied to the new SoLR account.

If the collapse happened in the autumn, the unfortunate punter will have been expecting the failed supplier's Fixed DD credit to have been sufficient to pay the big winter bills, but the SoLR won't make any allowance for this missing credit and will soon fret if the account goes into debit.  The punter will be hit with a double whammy, the SoLR's higher rates and big 'unsmoothed' winter bills.

The first few winter Fixed DD payments will effectively be Variable DDs in all but name.  However, the punter won't have put any money aside, so they'll be hit hard until the missing credit is eventually refunded.