How best to handle energy debt?

macman

Sea_Shell said:

But there is a big difference between willful non payment (of any amount) and either trying to keep your DD low, or paying what you can afford.

It sounds like due process still needs to followed...

"The need for a warrant does not apply when suppliers are switching smart meters to prepayment mode remotely. However, Ofgem, the energy regulator, has said suppliers must give customers four weeks to settle debts, and a further week’s notice before switching.

Ofgem has strict rules on converting customers to prepayment. A supplier must take a customer’s financial circumstances into account and they should also be allowed to repay debt over a number of months, before turning to prepayment."

So, if I read that correctly, the supplier simply has to write to the account holder and give them 4 weeks to clear their arrears in full, then another week if not complied with, before they switch them to a PPM remotely?
5 weeks in total then. That's an awful lot quicker, and much cheaper than applying for a court order to force entry and fit a PPM. To do it physically costs £100's. Remotely, almost zero. I can see the numbers going through the roof this winter.

fatbelly

Rather than worry about the media's headline figures (£5000 per year) I think it's best to research your price per unit, standing charge per day and get a feel for which appliances use power at which rate.

When someone asked me how much the 'discount' was for allowing your supplier to have a direct debit, I didn't know so I looked into it. For me:

standard direct debit tariff (I have Economy 7)

Day/night 31.37/ 21.33p per unit
standing charge 51.71p per day

without direct debit

Day/night 33.12/ 17.31p per unit
standing charge 56.62p per day

Sea_Shell

The problem (or one of the contributing problems) is the lack of general understanding of any of this.

Accurate Personal consumption/usage

Unit prices

Being able to do the maths to work out the cost in £s

It seems beyond many people ☹️

macman

i agree, almost everyone commenting on social media thinks the actual cost is whatever their DD happens to be at the present time, that 'fixed' means monthly charge, not unit charge, and that the price cap is the maximum, regardless of usage.
I doubt one person in twenty could tell you their annual consumption.
Lots of people wanting to know how much power their phone charger uses, but won't turn the CH down by 1C.
It's depressing.

EssexHebridean

PPMs aren't such a thing to be scared of as they once were - there is now relatively little difference between the unit rates on a credit or a PP meter, yes there is a difference in the standing charge but at least there is only one of those per day per meter!

My first advice would be to start now (or preferably 6 months ago) with setting money aside to cushion the blow this winter - project right now what you feel your realistic costs will be over the winter months, and then start stashing aside absolutely ANYTHING you can towards that. If you're currently overpaying debts, consider instead stashing the money into savings as quite frankly it may be better used keeping the lights on and the heating running in a few months. If you end up not needing to use those funds then they can get paid down against the debt later - right now though, priorities. 

Go round your house now, room by room. Look at everything that is plugged in - does it need to be? Is it on standby but could in fact be turned off at the wall? Can you manage without that item altogether? Check the lightbulbs - are they all LED? For rarely used bulbs then the sums would likely suggest leaving older ones in place until they blow unless you already have stashed LED replacements as for a bulb you only switch on for a few minutes on an occasional basis the replacement cost won't be gained back by the energy savings any time soon. For commonly used though, or fittings with multiple bulbs, changing them might make more sense. Think about stuff that is only used at certain times or indeed items like microwaves which you leave turned on at the wall because of the clock - we twigged recently that in fact there was little sense in us doing that as the cooker also has a clock - so the microwave is now switched off at the wall until it's needed. The clock radio in the bedroom now gets turned off as soon as it switches off on  a Friday morning and goes back on again on sunday night. If you use an immersion heater for hot water, stop and think properly about how you use it - are you heating it overnight on a timer every day but then maybe only using a bowlful of the water for washing up most days? That's another change we've made - ours is now off overnight but either switched on to top up the heat for 20 minutes in the morning, or right now as we're doing relatively little cooking that requires washing up it's off altogether - for a last thing at night facewash I boil the kettle, and for a single bowl of washing up we'd do the same.

Culprits for heavy electricity use tend to be electric showers, fish-pond pumps or heaters, obviously things like hot tubs and swimming pools, and some older fridge freezers - especially the big American style ones. Also - and one which might affect a lot of folk without them realising - gaming PC's - and more so as these often tend to be left on for long periods of time too. Basically - if it gives out heat in any significant amount then its probably costing you a fair bit to run. 

Thing winter and indeed probably most of next year is likely to be about deciding where quality of life and affording the costs meet, for many people. Sure in theory the only things that need to be left switched on in your house are the router, any alarms etc, and the fridge freezer - but in real terms most of us find that quality of life is improved by having other stuff "ready to go" too - even little things like the TV box being left in standby because then when someone reminds you about that killer show you'd been planning to watch while you're out and about, you can send a record request remotely. 

Also start to think now about options which will mean that you can use your heating less this winter if it reaches that point - so do a "stocktake" of blankets, spare duvets, throws etc. Got any old rugs rolled up unused? Consider getting them ready to pop down for added insulation for the floors once the weather turns chillier. Check window frames for draughts - a quick whizz round with a tube of sealant now will make all the difference come December. I find those wheat-filled bags that you heat in the microwave absolutely brilliant - they hold heat far longer than a hot water bottle seems to, heat in the microwave in a couple of minutes, and can be used for warming chilly beds before people climb in too. 

Ultimately, should you take out loans or put other expenses on credit cards to enable paying energy bills? No - probably not. It's all well and good saying that people can worry about the debt later but in real terms for the majority of people accruing debt is tremendously stressful, and the combined affects of the cost of living crisis plus the added strain of additional debt to try to cope with it is likely to simply push many people past the point of being able to cope. It feels ludicrous that here in the UK we are potentially having to balance off mental -v- physical health this winter though, doesn't it. 

Sea_Shell

I also wonder if this is going to put under strain the "my money, your money" household method of budgeting that many couples seem to use.

This might be a time to agree to go "all in" in one pot and if one party doesn't have personal spends money left over, then that might be just how it has to be for a while.

I've never quite understood that method, especially when one half has debts and the other savings (or "spends") and they're married.

This is all about weathering the storm, together, not who earns what!!!

EssexHebridean

We've found on here over the years that there can be all sorts of reasons for the way families manage their money - the key thing is that the method works for them, rather than that they slavishly follow a set formula just because it works for others, or others insist it's the only right way of doing things.  (We've also repeatedly found that each and every time this subject raises it's head it tends to create conflict as the "all in one pot" people tend to be very convinced that their method is right for all, and those who have legitimate reasons for doing things differently end up feeling attacked and unfairly picked on - jut saying!) 

fatbelly

Debt Camel is always worth subscribing to - she is particularly on the ball during this crisis.

This is a link to an informative article from Citizens Advice (from Debt Camel news)

https://medium.com/adviser/utility-debt-and-unaffordable-direct-debits-944d10e7dd2a

Sea_Shell

EssexHebridean said:

We've found on here over the years that there can be all sorts of reasons for the way families manage their money - the key thing is that the method works for them, rather than that they slavishly follow a set formula just because it works for others, or others insist it's the only right way of doing things.  (We've also repeatedly found that each and every time this subject raises it's head it tends to create conflict as the "all in one pot" people tend to be very convinced that their method is right for all, and those who have legitimate reasons for doing things differently end up feeling attacked and unfairly picked on - jut saying!) 

Oh I realise that it might work for people in "normal" times, but that the coming crisis is not normal, any many people will have to reassess and think outside of their normal box.

Carry on as is, may not be appropriate - Just sayin'😉

I'm including said family in this.

BadDebtor

Sea_Shell said:

So the consensus seems to be that as you can't get blood out of a stone, you should make sure you're fed and warm over winter, and worry about the debt later, as they can't take what you don't have, and are unlikely to be cutting people off by their 1000s as that would be politically unacceptable.   

However, the problem lies with those cases where there IS still some blood left in the stone, and very hard decisions are going to be need to be made around what is a real necessity and what there is potentially some wriggle room with.

Standards of living are going to have to drop, if people really want to avoid literally having no "blood left in the stone" to take.

These are going to be the hardest conversations!!

Actually the Energy companies have shown that have one of the most effective ways of getting blood out of a stone, which is ransom.

So first the obvious things, PREVENTION IS BETTER THAN CURE, there are a plethora of posts in the energy section about how to cut back on energy usage.  I am always amazed that people did not make these cut backs before, so when I see the crisis I think "welcome to my world, where I have been doing this for years" because I am on the scrap heap.

So first things first, make sure that there is no credit balance at the energy company, then change the type of direct debit, they have different names, but one is a budget direct debit that starts to take money for winter, the other is where you pay only for what you have used.

Next head over to Turn2Us and see if there are any funds you might be able to get access to.  Next contact your GP if you are suffering from Anxiety and Stress, ask them to refer you to a Social Prescriber, these angels help you get access to food banks and sometimes to little known local charities.

Next call your Council and ask for a discretionary payment and give your reasons.

Finally call your energy company and ask how to access their hardship funds, they will try and fob you off will all kinds of useless nonsense but every penny counts.

If your income is VERY low you might be able to get half price water, this is usually for people on benefits and they count the rent as income even if it is paid direct.

NOW WHAT HAPPENS WHEN YOU CAN'T AFFORD IT, HOW DO THEY GET BLOOD OUT OF A STONE?

First they remotely flip that wonderful Smart Meter we all paid £15 Billion for, into a pre-payment meter and your tariff for usage and standing charge are increased!! 

Your debt is then added to that meter, you can top the meter up via an App, their website or by taking a barcode to certain local shops.  Now here is the rub, when you top up say £20, they take a large percentage to service your debt so it only lasts a few days and then you are in the same position.  What many people do not realise is that you can ask for the debt percentage to be reduced, I think there are three or four levels, ask for the lowest.

Energy Companies say they do all they can not to cut off your energy but this is just BS, my neighbour was cut off loads of times, he ended up cooking on barbecues (mad) and used tea candles for light (madder).  What he did not realise is that you can ask for emergency £5 top up when you can't afford to top up.  Some make you queue for 2 hours and listen to an awful person in a foreign call centre treating you like something she trod on, when you get the £5 it only lasts a few days because the standing charge is so high.

So my advise is to resist moving to a debt meter AT ALL COSTS, you can lose your food when there is no power to the fridge freezer and the other inconveniences are massive.

Remember you can ask an Energy Company for "breathing space" in the same way you do other debts.

Here are rules of pre-payment meters.

https://www.citizensadvice.org.uk/consumer/energy/energy-supply/get-help-paying-your-bills/stop-your-energy-supplier-installing-a-prepayment-meter/

https://www.ofgem.gov.uk/check-prepayment-meter-rules

At the end of all this energy crisis I hope everyone remember that it is OFGEM who are the shill who do nothing for the consumer as they are mostly ex-industry and just write 300 page reports confusing MP's into pitying the poor poor energy companies!