£400 DISCOUNT USED FOR DEBT

pochase

SammiJxx said:

MWT said:

SammiJxx said:

I don't have a prepay meter, it is a repayment plan but I don't use direct debit, I have a card and pay each month at a Payzone outlet.

That changes things a bit, if it is not a prepayment meter you should not be getting vouchers.

I don't think I've seen any clear statements on how your situation will be handled, but I would expect your monthly payments for your current use to be reduced by the £66 and there to be no change in your payment towards the debt.

On a related point, is it possible that you could change to paying by DD? I ask as it is likely that you would be paying a little less if you could do that as BG generally charge more for a payment method other than DD....

BG class this as a direct debit even though I pay it cash so I believe that I should either receive vouchers or they reduce my £201 usage payment by £66 / £67 over the 6 months

What are your unit rates. You are paying a fixed monthly amount as you would pay a a fixed direct debit. That does not necessarily mean you will get the 7% direct debit discount. I would be very surprised if you get the discount.

pochase

Just had a read through the consultation with suppliers

BEIS recognises the operational difficulties in separating payments towards ongoing usage and suppliers’ needs to operate within BAU processes where possible to ensure scheme deliverability.

However, it is a priority for this scheme to ensure households can use their EBSS grant to enjoy increased consumption, not just reduced debt.

As this scheme starts at the end of summer, we understand that arrears should be at a minimum for most customers. We therefore expect and encourage suppliers to make it their priority to work actively to move customers with large arrears balances onto repayment plans wherever possible.

This should be in line with suppliers’ normal business processes in complying with supply licence condition 27, including Ofgem’s Ability to Pay Principles of:
(a) having appropriate credit management policies and guidelines;
(b) making proactive contact with customers;
(c) understanding individual customers’ ability to pay;
(d) setting repayment rates based on ability to pay;
(e) ensuring the customer understands the arrangement;
(f) monitoring arrangements after they have been set up; and
(g) re-engaging with a customer after an initial occurrence of a failed repayment arrangement.

This will help to ensure that, while EBSS will be allowed to contribute to debt and arrears, arrears balances should be minimised, and only an amount affordable for the customer should go towards debt.

The way I read it the suppliers should set up a payment plan with the customer, which was done in OP case.

Only the agreed repayment amount should go against the £67, if the £24 in case of the OP is paid I read it that the full £67 should be credited. If the debt repayment is not paid only the difference between £67 and the debt repayment would paid back/credited.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1096205/energy-bills-support-scheme-government-response.pdf

So I would say that the full amount should be paid back to the OP.

Sea_Shell

I know what they're "trying" to say with the line .....However, it is a priority for this scheme to ensure households can use their EBSS grant to enjoy increased consumption,  but it comes across badly!!!


Yes, we dont want the vulnerable feeling they can't put the heating on,  but the message should also be about reducing where you can IMO.

pochase

Don't forget that this document is not for the general public. This is based on the consultation that was done with the suppliers how the scheme should be implemented.

Here is question and Ofgem answer:

17.Do you agree with the proposed approach to providing the grant to customers with different forms of energy debt?

Yes, Ofgem recognise the intent of providing the grant to customers with arrears or debt on their account.
We note, however, that the consultation could be clearer on the extent to which the grant can be used to pay off existing arrears or debt, and to what extent it should be applied as genuine credit on customer accounts.
Without this clarity, there remains scope for different interpretations of the obligation to ‘deliver’ the grant for customers in arrears, debt or bad debt.
To ensure clarity of the obligation and of associated compliance expectations for Ofgem, we request that government provide further detail on the treatment of debt in the context of the EBSS grant payments. 

Section62

pochase said:

This will help to ensure that, while EBSS will be allowed to contribute to debt and arrears, arrears balances should be minimised, and only an amount affordable for the customer should go towards debt.

Only the agreed repayment amount should go against the £67, if the £24 in case of the OP is paid I read it that the full £67 should be credited. If the debt repayment is not paid only the difference between £67 and the debt repayment would paid back/credited.

....

So I would say that the full amount should be paid back to the OP.

Using the EBSS money to reduce debt is clearly intended to be an option.

How much is affordable to the customer is obviously going to be the difficult bit to get right.

I think it would be pushing things to say the full amount should be paid back to the OP, unless they can show a clear affordability issue.

pochase

I would think the payment plan agreed with the customer is the basis for this. A payment of £24 was agreed with the OP, I am assuming that this is the amount affordable.

So this is also the amount that can go towards debt.

Section62

pochase said:

I would think the payment plan agreed with the customer is the basis for this. A payment of £24 was agreed with the OP, I am assuming that this is the amount affordable.

So this is also the amount that can go towards debt.

I wouldn't be surprised if BG want to review the £24 going forward, partly to make sure it is still affordable with increasing energy/living costs, but also that £1000 paid in monthly installments of £24 should be cleared in 42 months (3 years 6 months, not 5).  Five year's worth of £24/month totals £1440.

If the £1440 figure is correct then it implies the OP would be paying £440 interest or charges - which seems improbable.  If interest were being charged on the debt then seeing whether it could be paid off sooner is always worth consideration.

Clearing £1000 over 5 years (with no interest) would equate to monthly payments of £16.67.

Unless I've missed something.

pochase

Maybe part of the debt is already paid off? It was maybe 5 years and the £1440 and now it is 3.5 years and £1000 left.

EdwardB

SammiJxx said:

I currently have a large debt (£1000) with British Gas for my electric - due to previously estimated bills. I have set up a monthly payment plan which is £201 usage & £24 for my debt, repaid over 5 years.
I have a pre-pay gas meter but currently, hardly using any gas as I am not using my heating and I boil a large pan of water for washing my dishes, etc.
My worry is that when the winter comes, I will be using over £100 on gas plus paying £225 per month for my electric.
I wasn't sure how the £400 would be distributed so I contacted British Gas via the online chat.
They have told me that the £400 will just be used against my debt so technically I will be worse off as I will still need to pay the agreed amount each month plus paying for my gas usage.

Are they allowed to do this ?

I have been told to ring up to set up a new payment plan as my debt will be lower but as it has been spread over 5 years, I estimate that my payments will only be about £7 less per month

Make a formal complaint and get the deadlock letter, then refer to the ombudsman on the bais that

BG Made an agreement that you have not  breached
The Gov provided this money to deal with the increase in Gas from October NOT for BG to service debt

My supplier told me it costs them £450 for a case to be referred to Ombudsman,so hopefully BG will see sense and agree to honour their commitment, if not it will cost them £450 and they may lose anyway.

Mobtr

EdwardB said:

SammiJxx said:

I currently have a large debt (£1000) with British Gas for my electric - due to previously estimated bills. I have set up a monthly payment plan which is £201 usage & £24 for my debt, repaid over 5 years.
I have a pre-pay gas meter but currently, hardly using any gas as I am not using my heating and I boil a large pan of water for washing my dishes, etc.
My worry is that when the winter comes, I will be using over £100 on gas plus paying £225 per month for my electric.
I wasn't sure how the £400 would be distributed so I contacted British Gas via the online chat.
They have told me that the £400 will just be used against my debt so technically I will be worse off as I will still need to pay the agreed amount each month plus paying for my gas usage.

Are they allowed to do this ?

I have been told to ring up to set up a new payment plan as my debt will be lower but as it has been spread over 5 years, I estimate that my payments will only be about £7 less per month

Make a formal complaint and get the deadlock letter, then refer to the ombudsman on the bais that

BG Made an agreement that you have not  breached
The Gov provided this money to deal with the increase in Gas from October NOT for BG to service debt

My supplier told me it costs them £450 for a case to be referred to Ombudsman,so hopefully BG will see sense and agree to honour their commitment, if not it will cost them £450 and they may lose anyway.

What a ridiculous comment. How can you raise a complaint for something that hasn’t even happened yet? One advisor has said the money will be used against the debt , who’s to say they haven’t given incorrect information? My advice would be to wait until the first payment is given in October & see what they do with it, then raise a complaint if it’s fully taken off your debt. My second bit of advice would be to cut down your electricity usage £200 p/m is a lot to be paying so you must be a high user.