Payment by Direct Debit

Makeyourvoiceheard

My energy supplier recently increased my DD based on achieving a nil balance on the anniversary of the start of my account with them. I had transferred to them in March 2015 so they were calculating my balance to be zero by the end of February - the end of the winter period! I raised the fact that the whole point of a DD is to spread the cost over a year - higher winter usage balanced out by lower spring, summer, autumn usage and that I was being penalised simply because of when I started my account with them. (I have also been permanently in credit even after the winter months for years). At first they fobbed me off with a standard response which completely missed the point I was making so I got back to them again. They appear now to have understood and my monthly DD is almost half what it was going to be! Thought this might be useful for others who are fed the same ridiculous reasoning!

ariarnia

Makeyourvoiceheard said:

My energy supplier recently increased my DD based on achieving a nil balance on the anniversary of the start of my account with them. I had transferred to them in March 2015 so they were calculating my balance to be zero by the end of February - the end of the winter period! I raised the fact that the whole point of a DD is to spread the cost over a year - higher winter usage balanced out by lower spring, summer, autumn usage and that I was being penalised simply because of when I started my account with them. (I have also been permanently in credit even after the winter months for years). At first they fobbed me off with a standard response which completely missed the point I was making so I got back to them again. They appear now to have understood and my monthly DD is almost half what it was going to be! Thought this might be useful for others who are fed the same ridiculous reasoning!

i'm confused (easily done) i would have thought if you will be 0 in feb then they have spread the cost over the year?

you just said yourself that you have been carrying and building credit all summer. that credit will be used towards your winter bill so you will be paying less than you 'should' each month of winter because you were paying more than you 'should' all summer. the reason your dd will be being adjusted will be because there and your estemate of your usage for the 12 months from you joined was to low (i.e you should have been paying more all year and have even more credit on your bill).

hopefully now you have had a full 12 months from february your dd should be at the right level and you should be 0 next February without your dd needing adjustment again (other than for the expected ofgem cap price rises). but if youve convinced them to drop it now then you might be in debt in feb and need your dd to go up again to cover the shortfall. 

Makeyourvoiceheard

Obviously increases in fuel prices means increased bills and therefore direct debits and my D/D had already been increased three times in the last year because of the increased cost of fuel. That's not my point.

My point is that the criteria my supplier was using to set my monthly D/D from October to February was a nonsense.

My supplier's reasoning for an increased D/D up to the end of February was unrelated to the cost of fuel. It was based on the time of year my account started. If I'd transferred suppliers in, for example, August then I'd expect to have a credit balance on the anniversary of my account (the summer months!). I was being penalised for the time of year I opened my account.

My supplier had set my monthly payment based on an (over) estimate of winter usage in order to achieve a zero balance at the end of February 2023 - the end of the winter period - the time of year when most people expect a debit balance after the winter months.

The point of a direct debit is to spread the cost so that increased usage over the winter months is balanced out by reduced usage over the rest of the year and to enable equal monthly payments to be made throughout the year. My supplier states on their website that a direct debit will enable 12 equal payments which means customers "always know what’s due, making it easier to plan ahead". I was being suddenly forced into a hybrid version of a variable D/D which is not the arrangement I supposedly have.

Since raising this with my supplier, my D/D has been revised based on the pattern of my usage at different times of the year and I'm now paying almost half the monthly amount they were previously asking for. Taking into account the government payments over the next few months, my expected usage (I keep records and check my bills every month online) and even allowing for another fuel increase, I am very unlikely to have a debit balance by February. However, it's not the end of the world if I do as my payments throughout the year will continue and easily cancel out any amount due at the end of winter.

I just wonder how many people have had their D/Ds suddenly hiked up over the winter by this supplier using the same sneaky criteria. If I change suppliers in the future I'll make sure to do it in the summer - just in case!

[Deleted User]

Makeyourvoiceheard said:

My supplier had set my monthly payment based on an (over) estimate of winter usage in order to achieve a zero balance at the end of February 2023 - the end of the winter period - the time of year when most people expect a debit balance after the winter months.

The time of year when I would expect to either have zero balance, having used up last summer's credit, or have whatever balance was appropriate based on the date of my annual review.

My supplier's reasoning for an increased D/D up to the end of February was unrelated to the cost of fuel. It was based on the time of year my account started. If I'd transferred suppliers in, for example, August then I'd expect to have a credit balance on the anniversary of my account (the summer months!). I was being penalised for the time of year I opened my account.

The point of a direct debit is to spread the cost so that increased usage over the winter months is balanced out by reduced usage over the rest of the year and to enable equal monthly payments to be made throughout the year. My supplier states on their website that a direct debit will enable 12 equal payments which means customers "always know what’s due, making it easier to plan ahead". I was being suddenly forced into a hybrid version of a variable D/D which is not the arrangement I supposedly have.

The point of the direct debit is to spread 12 months of use over 12 months of payments.  Yes, correct.

Your supplier was spreading the 12 months of usage between March 2022 & Feb 2023 into 12 months of payments between March 2022 & Feb 2023.  I'm struggling to see why this is inconsistent.  If something changed during the 12 months, either price or apparent usage, then they're not equal payments, but there are still twelve of them.  The other option (which occasionally used to happen on fixed contracts) is that they don't change your direct debit but in February 2023 just send you a bill for all the 'missing' money to clear your debt.  Customers (quite understandably) often don't really like being sent a massive debt recovery bill when it could have been spread over payments earlier.

If you changed supplier in, for example, August, then you would have 12 months of usage (August to July) spread over 12 months of payments (also August to July).  The exact same modifications would apply if something changed.

Paying for 12 months usage in 12 payments is not being penalised, where ever the counting starts.  You still have one of each month and one of each season.

I'm glad you've got a number that you like, but you weren't being penalised, there is no scam, and you've invented a problem based on "sneaky criteria" that aren't actually sneaky at all.

Makeyourvoiceheard

This is the first time in 7 years that my supplier has used this criteria. They have never reduced my direct debit when I've been in credit on the anniversary of my account (which has been most years). How come they carry out a review in September to suddenly increase payments from October to February? Surely the review should be done in line with the anniversary of my account i.e. February to begin a revised D/D in March if that's the criteria they're using. And I'm not confusing this with the increase in fuel costs - my D/D had already been increased in line with costs - understandably.
Continue to defend energy suppliers if you like but this is a money making nonsense.

[Deleted User]

How is paying for what you use "money making nonsense"?

Makeyourvoiceheard

I pay for what I use - no problem. I object to bolstering the credit balances of businesses like my current supplier. And yes - I will vote with my feet.

[Deleted User]

You’re not arguing about having a credit balance, or even about how big the balance is.  You’re simply arguing about the time of year at which you have a particular  balance.  Or more precisely, that your supplier is refusing to let you run at a debt.