Do Ovo Energy want to be a bank?

Options
Hi,

I'm actually a big fan of OVO and have been with them for years. However an email this morning has left me feeling a little annoyed.

They want to put my Direct Debit up from £204/month to £242/month and the only other choice I have is to pay a lump sum now of £490. This is apparently to bring my account back on track. However my account is already £456 in credit and my bill last month was £96. So I thought my Direct Debit was plenty already. I know we're looking at these horrible future costs, but I thought the government were going to cap these to some extent. I feel that OVO aren't taking that into account with their calculations as at £204/month for 13 months that's already £2,652.00.

So this is starting to feel a little bit like extortion, especially when you hear that the competitors aren't keen on taking anyone else on right now. I'm happy to get the 5% discount for paying by direct debit, but I don't particularly want to invest my money in an energy company, they don't feel like the safest place to keep your money. Are they FSCS backed?

I think my only option might be to cancel the direct debit, but that's really annoying as it's really handy. I wish I could just pay for what I use each month instead.

«13

Comments

  • Unit rates are about to go up by 20%, coming into the highest consumption part of the year, and your DD is going to go up by 20%.  Why do you think that is extortion?

    £400 credit isn't a lot on a £200 per month DD.

    Have you calculated your annual cost at the new unit rates, based on actual usage (+10% or so for last year's mild winter)?
  • macman
    macman Posts: 53,098 Forumite
    Name Dropper First Post First Anniversary
    Options
    Nothing to do with FSCS, but your credit balance is protected under SoLR should the supplier fail. And Ovo wouldn't be allowed to fail, because they're too big. They would simply be 'Bulb'd'.
    No free lunch, and no free laptop ;)
  • TheMilkmansDad
    Options
    annual usage? Tariff?

    Not much info provided but from what you've posted it seems to make sense what they are doing.

    Part of your post that worries me is the "£204/month for 13 months that's already £2,652.00" - the £2652 is close to the £2500 quoted "cap" figure which is not a figure you should be comparing anything against as it's the tariff that's capped not the amount you are billed.

    A bit more info is required here I think.
  • home_132
    Options
    Ok thanks for the comments. I still don't like keeping such a high credit with a company which isn't a bank and would much rather just pay for what I use. I guess we'll have to wait and see.
  • molerat
    molerat Posts: 32,007 Forumite
    Name Dropper Photogenic First Post First Anniversary
    Options
    My SIL has spent months trying to get £800 excess account credit off of them, they keep promising and nothing happens.
  • home_132 said:
    Ok thanks for the comments. I still don't like keeping such a high credit with a company which isn't a bank and would much rather just pay for what I use. I guess we'll have to wait and see.
    You can - switch to paying by card or bank transfer each month.  It's a little more expensive (usually) but you will pay for exactly what you have used each time.  Prepare to budget for the amount to be much higher in winter than in summer though.

    Don't OVO also pay interest on credit balances, far better than you can get in a bank account?
  • home_132
    Options
    Yeah I'm thinking of just paying by card each month, but DD is very handy and I would rather do that really. I'm also aware of the credit interest... I had considered upping my DD considerably and using it as a bank account to earn some decent interest, but I'd be concerned that withdrawing my money might not be straight forward. Once a company goes bust it gets even harder, I have a friend in that situation currently.
  • home_132
    Options
    annual usage? Tariff?

    Not much info provided but from what you've posted it seems to make sense what they are doing.

    Part of your post that worries me is the "£204/month for 13 months that's already £2,652.00" - the £2652 is close to the £2500 quoted "cap" figure which is not a figure you should be comparing anything against as it's the tariff that's capped not the amount you are billed.

    A bit more info is required here I think.
    Thanks, yeah I'm aware it's not as simple as it first sounds - nothing ever is with energy tarrifs is it!
  • home_132 said:
    Ok thanks for the comments. I still don't like keeping such a high credit with a company which isn't a bank and would much rather just pay for what I use. I guess we'll have to wait and see.
    The credit balance is 100% protected by Ofgem (or more accurately by all energy consumers). Whether suppliers should be allowed to hold such high credit balances is a different question that Ofgem needs to address through enforceable Regulation.
  • dunstonh
    dunstonh Posts: 116,596 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    Are they FSCS backed?
    To get FSCS protection, they would need to be regulated by the FCA.

    I think my only option might be to cancel the direct debit, but that's really annoying as it's really handy. I wish I could just pay for what I use each month instead.
    The whole idea of averaging out is that it gets you in the ballpark of your usage.  Spreading the load over the lower use summer months enables you to have much lower payments in your heavy use months.   Whether you pay as you go or have a reasonable average doesn't really make much difference.  i.e. pay £250pm or pay  £50 in the summer months and £500 in the winter months but end up paying £3000 over the year.

    So this is starting to feel a little bit like extortion
    Only if you don't understand what you are doing.  What they are proposing sounds entirely reasonable.  

    However, not once in your post have you mentioned your use.  You have just focused on your payment. 
    What is your annual use?  

    know we're looking at these horrible future costs, but I thought the government were going to cap these to some extent. I feel that OVO aren't taking that into account with their calculations as at £204/month for 13 months that's already £2,652.00.
    You dont have much summer credit for the monthly amount being paid. 3-5 times the monthly come September is the sort of ballpark figure you would expect.  Assuming that the monthly figure is at the correct level in the first place.




    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
Meet your Ambassadors

Categories

  • All Categories
  • 343.6K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 449.9K Spending & Discounts
  • 235.8K Work, Benefits & Business
  • 608.8K Mortgages, Homes & Bills
  • 173.3K Life & Family
  • 248.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards