EXTRA CHARGE PER KWH AFTER CHANGING FROM DIRECT DEBIT TO STANDING ORDER

SusanEThomas

I decided to change from direct debit for my gas and electricity with EDF to an ongoing standing order for the same amount on the same date. It was just so I would have control over what was taken out of my account as I didn't want EDF to suddenly increase the amount without any negotiation between us. I was taken aback this morning to receive an email to say that as I was now paying by cheque/cash (which I'm not) EDF will be charging me more per unit of electricity (and I assume gas) on both the per kWh unit and the standing charge ! I got straight on to the online chat but they insist that a standing order is processed in the same way as cheque/cash.  I tried explaining that the same payment comes straight out of my bank account to them on the same date each month and was not a payment by cheque/cash and should therefore be treated the same as direct debit but they are having none of it.   How can they justify an increase in the price of the amount of energy I am using just because I pay the same amount on the same date each month straight out of my account as I did when I paid by direct debit (I'm well in credit by the way).. I just wanted a bit of control.  I understand that it may cost more to process a cheque or cash but to charge people extra on the amount of fuel they are using just doesn't make sense to me.  I know if you want a paper bill it costs more but that's a charge for each paper bill and for a fixed sum.  I feel I am now being forced to go back to direct debit payments, I truly didn't realise that there would be these extra charges on the amount of fuel I use just because of my payment method.

MWT

SusanEThomas said:

...I was taken aback this morning to receive an email to say that as I was now paying by cheque/cash (which I'm not) EDF will be charging me more per unit of electricity (and I assume gas) on both the per kWh unit and the standing charge !

They are correct, you have moved from a DD payment which is under their control, to a payment method under your control... standing order.

What you should have done is asked to move to a variable direct debit, EDF call that a Direct Debit with exact payments'...

uksitebuilder

May be an idea to see if they will put you on Variable Direct Debit which only takes the billed/calculated amount each month

Robin9

DD is the cheapest way to pay  -  there's a discount of 6-7%

You can still get this with EDF if you change to monthly DD variable  - but it comes with a health (wealth) warning as your winter bills will be huge.

I'm on this for the gas -  last month was under £15 - I expect January to be £400-500

SusanEThomas

Thank you all.  I didn't realise I could do this. It does make sense. I'm hundreds in credit at the moment but understand this will get eaten up in the winter months. As a pensioner I qualify this year for winter fuel payment too which will help with the bigger bills. Thank you for your help.

Trynsave2

The DD system is easier to administrate and companies offer the discount to encourage payment that way. It has nothing to do with the money leaving your bank account. 

I would recommend that you go back onto DD, but not the variable one that others mention above as that gives permission to take payment for the full amount of energy used in that billing cycle. As you moved to SO to control payment amounts, the variable DD will have the exact reverse effect 

The DD guarantee in place obligates companies to advise you before any amount changes are implemented.

SusanEThomas

Ok thank you.. I'm beginning to be sorry I ever thought to do this in the first place, it's taken over my life for three days !

[Deleted User]

Hi,

if you were on a fix with your DD, unfortunately you wont get as good a deal now.

DullGreyGuy

SusanEThomas said:
How can they justify an increase in the price of the amount of energy I am using just because I pay the same amount on the same date each month straight out of my account as I did when I paid by direct debit (I'm well in credit by the way).. I just wanted a bit of control. 

Because you have taken control away from them... if your underpaying with your DD they can simply advise you it needs to go up and make the change themselves. Under an SO they are reliant on you making the adjustment which you may refuse to do or may say you will do but not actually do and so you slowly build up debt and it often involves employees having to discuss matters with you rather than automated letters.

Most energy companies offer a discount for paying by DD which clearly you lose if you move to SO

Staffordian11

SusanEThomas said:

I decided to change from direct debit for my gas and electricity with EDF to an ongoing standing order for the same amount on the same date. It was just so I would have control over what was taken out of my account as I didn't want EDF to suddenly increase the amount without any negotiation between us. I was taken aback this morning to receive an email to say that as I was now paying by cheque/cash (which I'm not) EDF will be charging me more per unit of electricity (and I assume gas) on both the per kWh unit and the standing charge ! I got straight on to the online chat but they insist that a standing order is processed in the same way as cheque/cash.  I tried explaining that the same payment comes straight out of my bank account to them on the same date each month and was not a payment by cheque/cash and should therefore be treated the same as direct debit but they are having none of it.   How can they justify an increase in the price of the amount of energy I am using just because I pay the same amount on the same date each month straight out of my account as I did when I paid by direct debit (I'm well in credit by the way).. I just wanted a bit of control.  I understand that it may cost more to process a cheque or cash but to charge people extra on the amount of fuel they are using just doesn't make sense to me.  I know if you want a paper bill it costs more but that's a charge for each paper bill and for a fixed sum.  I feel I am now being forced to go back to direct debit payments, I truly didn't realise that there would be these extra charges on the amount of fuel I use just because of my payment method.

Standing orders and bank transfers can be a nightmare for companies.

Yes, they get the money, but it is simply a credit in one of their bank accounts among probably tens of thousands of others.

Now, if their systems are good and every customer quotes their reference number in exactly the format the company needs, then the payments should get allocated to the correct customer once the IT team has input the bank file into the customer system.

But there will be many rejected records which need manual intervention to allocate because customers quote wrong references, perhaps put their name in instead, etc etc.

All this costs time and money. With direct debit, all the company does is run a program to extract a list of due direct debits and send it to BACS, then run a second file when they get back the list of "bounced" payments a few days later.

Much simpler and cheaper, hence they will charge you less.

pochase

And to make the reasoning even more understandable, Ofgem has a different cap for all non direct debit payments.

So when Ofgem decided they can bill more, and with them losing money of course they will charge the maximum what is allowed.

The above explanation is the reason why Ofgem has a separate cap for the non direct debit payments.