An idea for Ofgem

wrf12345

Ofgem recently made a lot of noise about energy companies abusing direct debits and lots of complaints on here about silly usage estimates and companies trying to increase dd's... surely the answer is to ban direct debit increases when accounts are in credit, with say an automatic £500 fine for companies that do so (£500 credited to the user's account). It would, of course, be a shock if Ofgem ever actually did something for consumers rather than making noise and doing the opposite.

gj373

Accounts should be in credit over the summer months. Perhaps ban increases if accounts in credit during November, December or January.

pochase

Sorry but I can see situations where a DD increase is completely justified even if there is a credit.

Somebody coming off a fixed rate on 1st of October is very likely to have a credit due to summer month with low use. Their rate will no more than triple (that was almost the case already in April).

Are you saying the energy supplier is not allowed to increase the direct debit even so it is clear that the customer will only pay a fraction of what is needed?

Apart from that fines would be paid to Ofgem, not to a customer anyway.

Mstty

gj373 said:

Accounts should be in credit over the summer months. Perhaps ban increases if accounts in credit during November, December or January.

Not everyones year runs summer to Winter so annual reviews are at different times. Some started their life in October so they run a debit then catch up in the summer.

[Deleted User]

Ofgem doesn’t investigate consumer complaints: these are left to the supplier with escalation to a private arbitration service. Disputes over individual payment plans could become protracted and messy as many people think that any DD adjustment is unwarranted when their account is in credit. As millions of people are now on a SVT rather than a fixed tariff, a judgement therefore has to be made about the energy tariffs in October and next April before deciding on a DD amount. If Ofgem garners enough evidence that there has been some malpractice then the present system of inviting suppliers to contribute to funds to help those struggling to pay their bills is probably a cost-effective way of making the point.

For an individual to claim that DDs etc have been set too high, the onus would be the individual to prove his/her case. The cost of a supplier’s defence and any fines would add to the cost of doing business and, possibly, lead to more supplier failures that we would all have to pay for. In saying all that, do not forget that suppliers have Licence Conditions that require them to avoid customer debt where possible (note that an account debit balance is not treated as a debt if the supplier is satisfied that there are enough monthly payments to cover the amount owed and future energy costs).

GingerTim

Ironically, given your voluble opposition to standing charges, you'd likely find that the ultimate cost of any fines etc in this scenario are added onto the standing charge when, as Dolor suggests, it contributes to supplier failure. 

[Deleted User]

Thinking a bit more about ‘proving your case’. Most courts want claimants to prove a material loss. Given that all consumer credits are 100% protected by the Consumer Levy, then the only possible loss is unpaid interest. 

If, say, I should be paying a £100 a month towards the cost of my electricity and the supplier has set my monthly DD payment at £200 a month then, putting to one side the loss of the use of that money, what is the actual loss?

Taking ML’s advice to put money into a Chase Bank Easy Saver at 1.5%, I calculate that the return on £100 a month invested for a year would be £1209.71: an interest payment of £9.71. A fair outcome from The Energy Ombudsman might I suggest would be £9.71 (assuming no income tax) plus a small amount of compensation. 

I can see all manner of fraudsters trying to inflate their monthly DD payments/usage if they thought that a £500 energy credit was on offer.

markin

Cap the credit at 3 winter month usage, Would put a stop to people needlessly being 1000's in credit

pochase

How many people do you know that are 1000's in credit?

I have seen 2 threads here in the last 2 month who claimed to be £1000 and £4000 to £5000 in credit.

The person with the £4000 to £5000 never came back when people started to ask question about it. The second one turned out to be with BG and did only see the credit adding up, but as BG only bills every 6 months did not realise that three was a high bill coming up against this credit.

[Deleted User]

markin said:

Cap the credit at 3 winter month usage, Would put a stop to people needlessly being 1000's in credit

Yes, that would work; however, the main reason why credit balances get so high is because a large number of consumers believe that their suppliers have psychic powers. Estimated usage by definition will always be wrong: incorrect estimates lead to inflated annual consumption projections and higher than necessary monthly DD payments.

FWiW, I pro-actively manage my supply account balance by ensuring that there is at least one month’s credit sitting in my account: that is, enough credit to cover my next bill. I can then play tunes on my supplier’s DD adjustment tool. I have had my DD as low as £1 a month and my supplier has yet to cry foul. Money that I would previously leave in my supply account now sits in a Chase Bank 1.5% easy access account. It is not a lot of effort for a few extra £s.

wild666

I was nearly  £1000 in credit when I left Bulb. When I moved to them they estimated my usage at nearly £67 per month for the 2 bedroom flat but my monthly usage was more in the £40 monthly usage range, meaning I paid them around £20 per month more than I used, my add blocker stopped part of the site saying use your own calculations that's why I was paying so much over the odds each month. 
I got the money back within days of leaving them as I didn't send a reading and they estimated the monthly reading far in excess of the readings on the meters so I emailed them and they worked out the new bill and refunded me within 48 hours of me  sending the readings for the final day from my smart meters.