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Energy regulator set to crack down on suppliers setting excessive direct debits under new plans

Energy regulator Ofgem is set to crack down on firms hiking direct debits excessively under new proposals announced today. The plans will see existing rules tightened amid concerns suppliers are playing “fast and loose" with direct debit increases and making customers pay more than they need to.

Read the full story:

Energy regulator set to crack down on suppliers setting excessive direct debits under new plans

Energy & Utilities Editor at MoneySavingExpert.com
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  • I'll believe it when I see it.
  • Alnat1
    Alnat1 Posts: 3,628 Forumite
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    It seems that many of those who complain of excessive increases often use excessive amounts of energy.

    It's time to see the prices as a warning to work out how to cut use before winter sets in.
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  • victor2
    victor2 Posts: 7,962 Ambassador
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    MSE_Gary said:
    Energy regulator Ofgem is set to crack down on firms hiking direct debits excessively under new proposals announced today. The plans will see existing rules tightened amid concerns suppliers are playing “fast and loose" with direct debit increases and making customers pay more than they need to.

    Read the full story:

    Energy regulator set to crack down on suppliers setting excessive direct debits under new plans

    There does seem to be a small issue with some people having Direct Debits that do not align with their usage, but in the majority of cases, at least those that we seen on here with people complaining about "excessive" Direct Debits the issue is people do not understand current pricing and their energy usage, rather than inflated Direct Debits. 

    You do see a lot of people (understandably) thinking of energy usage in monthly monetary amounts rather than kWh actually used, but it is about time the regulator clamped down on the financial operations some suppliers use.
    The whole idea of monthly direct debit payments when it was introduced, was to spread the annual cost of energy evenly over the year. Suppliers having seasonal rates went against that model, and they do now seem to be able to get away with charging people excessively all year round.
    There is much support for customers being able to pay the full balance on receipt of the bill. While that will eliminate the issue of suppliers building up credit, it will doubtless result in some customers being unable to pay their bills in the winter. How should suppliers deal with that, given that the energy has already been used and it will increase the cost to other customers, even if just to cover the cost of installing more pre-payment meters?

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  • si_74
    si_74 Posts: 64 Forumite
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    Alnat1 said:
    It seems that many of those who complain of excessive increases often use excessive amounts of energy.

    It's time to see the prices as a warning to work out how to cut use before winter sets in.
    Exactly right!

    There's isn't really any positive side to the current pricing. But if people use it as a way to look at their energy use, and also to understand how energy pricing works, then many will find themselves in a stronger position once it all (hopefully) settles down.

    I am sure the energy companies use customer apathy and ignorance to their benefit and it would be good if more people had the knowledge and confidence to challenge them.
  • This announcement comes out of the current Government’s playbook: ie, it is totally devoid of any detail. 

    Rest assured that if energy suppliers have to ring fence consumer credits then the cost of borrowing will be added to consumer bills. Not a great time to implement this change when interest rates are so high.

    That said, who exactly is going to determine whether my credit balance is too high? Never to exceed a percentage of the estimated annual bill might be one way, but this also open to supplier exploitation. 

    Sadly, OfGem has adopted a reactive rather than proactive approach to counter its past failings. 
    It will be interesting to see how this one plays out.

  • pochase
    pochase Posts: 3,449 Forumite
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    Some of the success stories of energy suppliers taking back the increases are scary. If you look at the numbers the increases were often completely justified, and next spring we will see a lot of emails "I am in debt, why did the supplier allow me to reduce my direct debit".

    Yes there are real cases of inflated direct debits, but the majority of people are complaining because the "feel" the increases are excessive, not because they have done the numbers.
  • Alnat1
    Alnat1 Posts: 3,628 Forumite
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    What the government needs to do is to make the energy companies issue monthly bills and a ruling that the meter MUST be read at least every 3 months.

    Most of the problems we see on here are with companies that only bill every 6 months and bills that have been estimated for many months, even years.
    Barnsley, South Yorkshire
    Solar PV 5.25kWp SW facing (14 x 375) Lux 3.6kw hybrid inverter and 4.8kw Pylontech battery storage installed Mar 22
    Daikin 8kW ASHP installed Jan 25
    Octopus Cosy/Fixed Outgoing 
  • Alnat1 said:
    What the government needs to do is to make the energy companies issue monthly bills and a ruling that the meter MUST be read at least every 3 months.

    Most of the problems we see on here are with companies that only bill every 6 months and bills that have been estimated for many months, even years.
    The requirement to physically read meters was dropped some years ago. The meter reading savings are included in the smart meter business case. Suppliers now only have to obtain one meter reading per year. In my opinion, consumers do need to take some responsibility for providing frequent meter readings if they do not want estimated bills.

    I do though agree that monthly statements should be a Licence Condition.
  • Alnat1
    Alnat1 Posts: 3,628 Forumite
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    It's often elderly people who can't easily access their meters, hidden away in cupboards or placed really high or low. A clear warning on a bill, large print, saying it is based on estimated readings and may not accurately reflect usage could help. 

    My Dad for instance won't have smart meters, says they're a security risk and anyone might be able to read them, not quite sure why that's a problem. Tbh he said something similar about contactless payments until covid came along and I said the keypads might be full of germs. I tried saying he was happy to have a "smart" meter for his water and what was the difference but he isn't having it.
    Barnsley, South Yorkshire
    Solar PV 5.25kWp SW facing (14 x 375) Lux 3.6kw hybrid inverter and 4.8kw Pylontech battery storage installed Mar 22
    Daikin 8kW ASHP installed Jan 25
    Octopus Cosy/Fixed Outgoing 
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