Why in UK the DD amount is constant figure?

wild666

Mstty said:

@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.

I agree many people don't know how to work out their bill even though the figures to calculate the bills are clearly printed on every statement. 
I have smart meters so I only have to work out the gas usage and I use 11.4kWh to every unit of gas so my bill is mostly over estimated. This saves all the multiplying by 1.02264 then the CV and dividing by 3.6 to work out the bill, I'd rather over estimate my usage than under estimate it any day.

agentcain

There's a simple solution to the FMDD issue from the perspective of losing credit. The payments could go into a protected scheme like deposits. Even in the case of a company going bust, this money exists and is returned. I don't see the argument of "raising standing charges to protect credits" holding water then, as it never should. I'm not sure why people are ok with this. 

There's no incentive then to raise DD more than needed and at the end of the year or even better on April, after winter's done, any balance could be returned in whole automatically.

pochase

The high standing charge is not an insurance to protect customer credits, it is to pay back the costs of those credits for the suppliers that went bust already last year, along with other SOLR costs.

So  your idea will not reduce the standing charge by a single penny.

GunJack

agentcain said:

 and at the end of the year or even better on April, after winter's done, any balance could be returned in whole automatically.

Why?? If I am staying with the same supplier, why would I want my credit balance returned? I personally like having a credit balance to allow for unexpected consumption, supplier going under, or any other reason I can think of.

I have to go through this every 6 months when my water company produce a bill - reduce DD to stupid level automatically just because  I have a credit balance. I have to phone them just after every bill is produced to reinstate my DD to what I want it to be, and it's a right nause having to do that.

Stop trying to penalise those of us who run our accounts just fine...

Ultrasonic

GunJack said:

agentcain said:

 and at the end of the year or even better on April, after winter's done, any balance could be returned in whole automatically.

Why?? If I am staying with the same supplier, why would I want my credit balance returned? I personally like having a credit balance to allow for unexpected consumption, supplier going under, or any other reason I can think of.

I have to go through this every 6 months when my water company produce a bill - reduce DD to stupid level automatically just because  I have a credit balance. I have to phone them just after every bill is produced to reinstate my DD to what I want it to be, and it's a right nause having to do that.

Stop trying to penalise those of us who run our accounts just fine...

I don't see how a credit balance would help you if a supplier went bust. The opposite is possible though.

GunJack

Ultrasonic said:

GunJack said:

agentcain said:

 and at the end of the year or even better on April, after winter's done, any balance could be returned in whole automatically.

Why?? If I am staying with the same supplier, why would I want my credit balance returned? I personally like having a credit balance to allow for unexpected consumption, supplier going under, or any other reason I can think of.

I have to go through this every 6 months when my water company produce a bill - reduce DD to stupid level automatically just because  I have a credit balance. I have to phone them just after every bill is produced to reinstate my DD to what I want it to be, and it's a right nause having to do that.

Stop trying to penalise those of us who run our accounts just fine...

I don't see how a credit balance would help you if a supplier went bust. The opposite is possible though.

Because the balance is protected under SoLR, the fact you know it's coming back means you can sit back and let the process run it's course without having to worry about delays in getting new DD set up, etc... having a couple of months-worth of credit is very handy, as the last round of SoLRs has shown

Ultrasonic

GunJack said:

Ultrasonic said:

GunJack said:

agentcain said:

 and at the end of the year or even better on April, after winter's done, any balance could be returned in whole automatically.

Why?? If I am staying with the same supplier, why would I want my credit balance returned? I personally like having a credit balance to allow for unexpected consumption, supplier going under, or any other reason I can think of.

I have to go through this every 6 months when my water company produce a bill - reduce DD to stupid level automatically just because  I have a credit balance. I have to phone them just after every bill is produced to reinstate my DD to what I want it to be, and it's a right nause having to do that.

Stop trying to penalise those of us who run our accounts just fine...

I don't see how a credit balance would help you if a supplier went bust. The opposite is possible though.

Because the balance is protected under SoLR, the fact you know it's coming back means you can sit back and let the process run it's course without having to worry about delays in getting new DD set up, etc... having a couple of months-worth of credit is very handy, as the last round of SoLRs has shown

I know the credit balance is protected but this in itself doesn't make it advantageous to have had a credit balance in the first place. Through my SOLR transfer from Pure Planet I left the DD active as instructed, the same monthly payments kept going out and the transfer was seamless. I had virtually no credit balance at the start or end of the process. You'll see other threads where people have had issues getting credit balances transferred though, at which point they've been positively worse off than if they'd kept the money in their own bank accounts.

I you like to have a significant credit balance as it helps you manage your finances then great. It isn't objectively better for consumers though.

sammyjammy

Olinda99 said:

Just to add OVO pay 3-5% on credit balances (depending on how long you have been with them) so a high fixed DD is the way to go !

Until they go bust and you have to wait months to get that money back!

Chrysalis

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?

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.

The billing system is very unusual, some of us on here, try to explain the pitfalls of it.  But one of the people who replied stated it started when all these small resellers started selling energy and here we are many years later with this now the most common billing type.  It is flawed in that most pay for energy before they use it and energy companies can use it as free cashflow plus even worse it is lost forever if a company is liquidated.

Also to note they not actually fixed, they can be changed whenever the supplier wants, and with the cap raising every 6 months, a fixed SVR is 6 months at best so the idea of not getting a big jump next winter on this billing system is la la land at the moment unless you on a current long term fixed deal.

As you said its not used on any other service or even used much by energy companies outside of the UK.

Chrysalis

theoretica said:

oliverbrown said:

Ultrasonic said:

Like many situations, I believe it's important to prioritise the most vulnerable / most likely to get into financial difficulty.

And overinflated direct debits have no effect on the financial affairs of people in financial difficulty?

How common are these overinflated DDs in reality?  Mine has always been around right - my annual usage in kWh at whatever my current tariff is.  Simple enough, though this simplicity may be because I have had fairly stable energy use and this year looks much like last year. No household members moving in and out or moving home or anything like that. Rather than trying to get rid of both the disadvantages and advantages of the fixed DD why not just aim to tackle the disadvantages and any overinflation of DDs.  Controlling how much credit can be built up, or more clarity of how the DD is calculated and highlighting how your use compares to the predicted usage.

Common enough that the minister for business has threatened fines to the energy companies unless they stop the practice publicly a couple of weeks ago and Martin made a video about it saying he would contact parliament.

It's widespread at this point.

Many MSE users seem unaware though which likely shows how many people dont actually calculate their bills but are only interested in that magical DD number as if its all that matters.  There has been a few threads on this forum about it but each thread got hardly any replies.