Direct Debits

stephennetherlee

Can anyone explain how it is possible to charge more for energy if you do not pay by Direct Debit when the price is capped?  I can understand this was possible before, but now that the cap is the highest possible rate, how can companies make a difference for those who pay by Direct Debit?  Do they reduce the price for them below the capped rates?

jimjames

There is a different cap for DD and non DD tariffs. Non DD is around £200 more per year

stephennetherlee

I can't see anything in any of the information around this which suggests there are two different price caps - if what you say is correct, this is very well hidden.

MWT

stephennetherlee said:

I can understand this was possible before, but now that the cap is the highest possible rate, how can companies make a difference for those who pay by Direct Debit? 

It is an easy mistake to make with the way the media continually refers to 'the' cap, implying it is a single figure.

In reality there are different caps for every combination of region, fuel type, payment method and for electricity, single or multi-rate metering.

So for payment type, DD payment is the cheapest, then prepay and finally standard credit (payment on receipt of bill)

For tariffs that are not protected by the cap, fixed tariffs for example, then yes, it is also typical for DD payment to get a discount when compared to standard credit payment.  

stephennetherlee

Thanks - my company (SO energy) doesn't differentiate between customers paying DD and those paying standard credit.  Presumably they must be using the DD price cap rate for everyone?

Astria

stephennetherlee said:

Thanks - my company (SO energy) doesn't differentiate between customers paying DD and those paying standard credit.  Presumably they must be using the DD price cap rate for everyone?

Some companies have a lower rate of usage for people paying with DD.

Some do not, it's a flat rate. You want to make sure they are not charging the non-DD rate though!

stephennetherlee

Surely they can't charge the non-DD rate since the same charge is levied on DD payers as well?

stephennetherlee

I've looked at Ofgem's site and if the postings here are correct, then its information is very misleading - see below:

The energy price cap is a backstop protection from the government, calculated by Ofgem. 

It applies if you’re on a default energy tariff, whether you pay by direct debit, standard credit or a prepayment meter. 

[Deleted User]

Yes, "the price cap" as a procedure is there and applies.

The value of the price cap, however, is different in each region, for each payment type, and for single rate or E7 - in each variation.

This is very very clear in the official OFGEM publication.

molerat

stephennetherlee said:

I can't see anything in any of the information around this which suggests there are two different price caps - if what you say is correct, this is very well hidden.

https://www.ofgem.gov.uk/sites/default/files/2022-08/Default tariff cap level - 1 October 2022 - 31 December 2022.pdf

Clearly shows the different maximum caps for different payment methods of which there are three

stephennetherlee

The info I quoted was from the Ofgem FAQs for the public - I understand that if you dig deeper the info is available, but I don't agree it is 'very, very clear' for the public.  This is yet another opacity/complexity in the system which makes it difficult for the population in general to navigate the market.