Fixed Rate energy Tariff lower than cap - DD to be reduced from 1st October How does that work?

Silvers11

I am on a fixed rate Energy Tariff  which will be lower than the price cap from 1st October. Martin has said that there will therefore be no reduction to the unit cost of a KWH as a result, which is absolutely fine. I understand that. BUT some energy companies ( mine included) are 'refunding' the £400 Energy help that we are all getting by reducing the Direct Debit each month for the next 6 months. Also fine. BUT if there is no reduction to the unit rate and my unit rates remain the same then how do I benefit from the £400? I'll get a £400 reduction in my Direct debits but the cost of what I actually use will remain the same so I will still have to pay the full amount overall as the Bill itself won't be reduced by £400? I can't believe that is right but grateful if anyone on here can shed any light on this for me please?

Ultrasonic

Direct debit amounts are either being reduced by £66/£67 or a refund of this amount is given to the customer. In either case, the account balance doesn't 'lose' this amount of money. You are gaining financially by a total of £400 over the next 6 months.

The_Fat_Controller

What ?

The government rebate will mean YOU pay £400 less over the six months starting from October.

For example if your actual monthly bill was £200 and your DD also £200, you would pay £1200 over 6 months in normal times.

With the rebate you will only pay £800 due to the reduced DD.

You get £1200 of energy for £800

[Deleted User]

The DD gets reduced by £66 or £67, but the amount credited to your account is the 'old' number.

pochase

What is fixed and lower are the unit rates.

The direct debit amount is not what you are paying for energy, it is just paying into a "savings" account that pays for your energy cost.

If you use more than what is covered by your direct debit you will have to pay more, if you us eless you pay less,

Silvers11

pochase said:

What is fixed and lower are the unit rates.

The direct debit amount is not what you are paying for energy, it is just paying into a "savings" account that pays for your energy cost.

If you use more than what is covered by your direct debit you will have to pay more, if you us eless you pay less,

Thanks pochase. I understand that entirely. I think I haven't worded my question very well as that wasn't the question. But I appreciate you trying to respond :-)

Silvers11

Ultrasonic said:

Direct debit amounts are either being reduced by £66/£67 or a refund of this amount is given to the customer. In either case, the account balance doesn't 'lose' this amount of money. You are gaining financially by a total of £400 over the next 6 months.

Thanks @Ultrasonic - so are you saying that £66 or £67 per month will in effect  be credited to my actual account  while my DD is reduced by £67 or £66 for each of these months? That would certainly be fine as I would benefit from the £400 over the next 6 months.  As I say it's because I have a fixed rate which will be lower than the cap from 1st October which has me confused at how it will work!

Silvers11

[Deleted User] said:

The DD gets reduced by £66 or £67, but the amount credited to your account is the 'old' number.

And many thanks to you too @[Deleted User]. Succinctly put  - and very clearly too!! Much appreciated

Ultrasonic

Silvers11 said:

Ultrasonic said:

Direct debit amounts are either being reduced by £66/£67 or a refund of this amount is given to the customer. In either case, the account balance doesn't 'lose' this amount of money. You are gaining financially by a total of £400 over the next 6 months.

Thanks @Ultrasonic - so are you saying that £66 or £67 per month will in effect  be credited to my actual account  while my DD is reduced by £67 or £66 for each of these months? That would certainly be fine as I would benefit from the £400 over the next 6 months.  As I say it's because I have a fixed rate which will be lower than the cap from 1st October which has me confused at how it will work!

Your fix being cheaper than the government EPG (new 'cap') doesn't change anything. The only time something slightly different would happen is if your direct debit amounts are less than £66, where the would result in extra credit building up in your energy account.

wrf12345

given the predatory accounting systems employed by the energy co's, if your Oct bill is a lot higher than your dd and the £67 arrives a week later, the system may automatically decide to increase the DD to stop you going into debt but who knows - unlikely that these accounting systems were designed to distribute "free" govn money. Same with the council, only just got my £150 taken off the bill, they seemed to have set up a new dept to deal with it even though any sensible system would have knocked the money off the bill in April.

Silvers11

wrf12345 said:

given the predatory accounting systems employed by the energy co's, if your Oct bill is a lot higher than your dd and the £67 arrives a  week later, the system may automatically decide to increase the DD to stop you going into debt but who knows - unlikely that these accounting systems were designed to distribute "free" govn money. Same with the council, only just got my £150 taken off the bill, they seemed to have set up a new dept to deal with it even though any sensible system would have knocked the money off the bill in April.

That wouldn't surprise me to be honest!! And I agree the systems aren't set up to deal with this.  Re the Council Tax - Our Council DID knock it off our Bill in April so our monthly payments actually went down amazingly. Regarding the Energy Bill I got a fix last February which didn't start until nearly the end of March so I am well in credit just now as it has all been over the warmer weather -  but I can see I'm going to have to keep an eye on what actually happens in the event. I suspect a lot of things are going to go wrong.....