Shell Energy Raising Direct Debits Too High?

erehwon

I had an email from Shell Energy a couple of days ago telling me I would use £1860 of energy in the next three months and so they were raising my DD to £421, taking into account my (very large) credit.  I thought this was too high as I think I have been overpaying my energy over the last year.  So I went through all my bills and worked out how much energy I used during the same period last year.  I worked that out to be about £1360 using current rates, ie £500/27% less. And that's just for THREE MONTHS!

I called them up and said I thought it was too high and they asked me what I wanted to pay.  What I want to pay is the right amount!  I got it reduced to my original amount which I thought might be about right. Using your Energy DD Calculator it looks about right, assuming the DD will be reduced by £66 each month with the rebate.

What I don't understand is how the energy companies can brazenly hike up everyone's DDs to unjustifiable levels, so they can put some more money in their coffers over this time.  Is there not any regulation in this area to ensure they are charging households the right amount?  I have a feeling most people will just assume the energy companies are charging them the right amount.  Money is tight for everyone and it is unethical for these companies to overcharge people at this time.  Yes, I know we will get our money back eventually, but money is short now.

So go check your energy usage now and reduce your Direct Debit!

[Deleted User]

erehwon said:

What I don't understand is how the energy companies can brazenly hike up everyone's DDs to unjustifiable levels, so they can put some more money in their coffers over this time.  Is there not any regulation in this area to ensure they are charging households the right amount? 

There is - but in both directions, which is almost impossible to guarantee compliance with.

OFGEM have told suppliers basically to avoid customers being in debt at all costs, and at the same time to make sure nobody has a direct debit higher than they need.  Quite understandably, they are finding this difficult and getting it wrong on many occasions.  As you've noticed though, they have a tendency to err high.

I would note though, it's not overcharging, it's just paying too far in advance.

Neil_Jones

erehwon said:

I had an email from Shell Energy a couple of days ago telling me I would use £1860 of energy in the next three months and so they were raising my DD to £421, taking into account my (very large) credit.  I thought this was too high as I think I have been overpaying my energy over the last year.  So I went through all my bills and worked out how much energy I used during the same period last year.  I worked that out to be about £1360 using current rates, ie £500/27% less. And that's just for THREE MONTHS!

I called them up and said I thought it was too high and they asked me what I wanted to pay.  What I want to pay is the right amount!  I got it reduced to my original amount which I thought might be about right. Using your Energy DD Calculator it looks about right, assuming the DD will be reduced by £66 each month with the rebate.

What I don't understand is how the energy companies can brazenly hike up everyone's DDs to unjustifiable levels, so they can put some more money in their coffers over this time.  Is there not any regulation in this area to ensure they are charging households the right amount?  I have a feeling most people will just assume the energy companies are charging them the right amount.  Money is tight for everyone and it is unethical for these companies to overcharge people at this time.  Yes, I know we will get our money back eventually, but money is short now.

So go check your energy usage now and reduce your Direct Debit!

Direct Debit is not a bill.

https://www.moneysavingexpert.com/utilities/energy-direct-debits/ might be of interest.  "Firms must set [Direct Debits] based on the best available information. Yet many people often, though not always rightly, feel they are being hard done by, so how do firms actually decide what you'll pay?"

The usage amount this year may not be the same as last year - you don't say how far in credit you are (bearing in mind 95% of people will be in credit coming out of the summer) but a so-called "beast from the east" and minus seven degrees for days on end may  mean you eat through that credit in two months.

This sort of situation is usually caused by bills generated on estimated readings for months on end, until a proper reading turns up and then it seems to go crazy. Also profit margins on domestic energy is capped at just 2%.

erehwon

I know that I'm not being overcharged, but paying too far in advance is very unfair.  I'm on a smart meter so readings are very accurate.  My credit is £600, which will go a long way to reducing my payments over the next few months, with a bit to spare for the unexpected cold weather.  I'm assuming I should have zero credit around April time.

I can understand them being cautious to avoid people going into debt, but it seems they are being overzealous for their advantage.

[Deleted User]

Overzealous, but not really to their advantage particularly.  Or only to the extent of avoiding it being to their detriment if things go wrong.  They don't make any extra profit by holding customer money, and it's actually a liability on their balance sheet.

dejjones

My direct debit with Octopus, in October, was £121
In early November they emailed me saying my new DD would be £332.

After a series of emails and phone calls they finally agreed that the correct amount, based on their estimate of my yearly usage, should be £174.and it was then adjusted.

I am still waiting for them to explain to me how they came up with the £332 figure and they continually refuse to tell me.

Back in May 2022 this appeared in the press:-
https://www.dailymail.co.uk/news/article-10934297/Ofgem-announces-plans-stop-energy-firms-overcharging-customers-direct-debits.html

It seems obvious from my experience and erehwon's experience above that the overcharging practise is still going on.

There are numerous posts on review sites making the same complaints.

I also have 80+ year old neighbours who had the same problem with EDF, 

How does one bring this to the attention of OFGEM?

QrizB

dejjones said:

How does one bring this to the attention of OFGEM?

You don't, OFGEM will not accept complaints from the public.

[Deleted User]

dejjones said:

My direct debit with Octopus, in October, was £121
In early November they emailed me saying my new DD would be £332.

After a series of emails and phone calls they finally agreed that the correct amount, based on their estimate of my yearly usage, should be £174.and it was then adjusted.

I am still waiting for them to explain to me how they came up with the £332 figure and they continually refuse to tell me.

Back in May 2022 this appeared in the press:-
https://www.dailymail.co.uk/news/article-10934297/Ofgem-announces-plans-stop-energy-firms-overcharging-customers-direct-debits.html

It seems obvious from my experience and Neil's experience above that the overcharging practise is still going on.

There are numerous posts on review sites making the same complaints.

I also have 80+ year old neighbours who had the same problem with EDF, 

How does one bring this to the attention of OFGEM?

Have you actually seen the OFGEM documents regarding this issue - or are you relying on a single article in the Daily Mail as the basis of your understanding of the legislation?

It was a consultation on a slight technical change on the wording of two parts of the supply licence, one of which would make a difference only to a small sub-set of customers (that might not actually exist at the moment), and the other of which could have some unforeseen and unhelpful consequences.

It had only partial support, the ombudsman services themselves even noting that DDs being too low was a much more severe problem.

The licence was modified on 17 October, but with a large set of notes on the decision document that can be summarised as "we know this doesn't really change the situation in most cases, but that's ok, it was only the very extreme ones that concerned us, please don't let anything strange happen because we've said this".

Oh, and of course you know that you have never, at any point in the situation you describe, been overcharged.  Neither have your neighbours.  You might be building up a larger credit balance than you think is necessary, but that is not overcharging.

ariarnia

and i dont think anyone has actually pointed out that last year was very mild (compared to historic winter temps) so using use last year as a forecast for this year could be fine (this year has been extremely mild so far) but the energy companies will be basing there forecasts on your use last year AND what that use would be if the winter was more like the average.

so if you only look at last year to say what you 'should' be being charged then you would most likely underestemate but the energy company will be over estemating if this year is also unusually mild.

the right answer is normally somewhere in the middle which is why its a good idea to look at your credit balance when the weather has started to warm not right at the start of winter in october or november 

we have a look at our use and balance in january (this year we might hold off until we have an idea of the april prices) because we normally turn the heating off in early feb and just have a fire on the odd chilly night. (not that we havent had march's where we've had to turn the heating back on because of snow not that long ago)

[Deleted User]

You don't, OFGEM will not accept complaints from the public

You are right - Ofgem does not deal with individual complaints; however, it will accept ‘evidence’ of any breaches of its guidance and Regulations. The ‘evidence’ is passed on to its Compliance Unit. 

Consumer.affairs@ofgem.gov.uk is the contact email address.

The OP will only receive a standard acknowledgement and no updates. 

dejjones

Deleted_User said:

Have you actually seen the OFGEM documents regarding this issue - or are you relying on a single article in the Daily Mail as the basis of your understanding of the legislation?

No I haven’t seen any OFGEM documents, but why do I need to?

The headline from the Daily Mail says :-

“Ofgem announces plans to stop energy firms overcharging customers on direct debits as it accuses suppliers of using the money like an 'interest-free company credit card”

It seems to me that that describes exactly what I have experienced, and probably others on this thread too.

So they are still at it, even after OFGEM’s plans, and if it is not highlighted they will keep at it.

One result of OFGEM’s plans and Martin Lewis’s campaign in the summer was that all the big energy providers published their methods of setting direct debits:-

https://www.moneysavingexpert.com/utilities/energy-direct-debits/

When I calculated mine using this info it came to virtually the same as my corrected figure (£174).

So there is no doubt in my mind that they deliberately over estimated my DD by £154 more than their own published calculation method.

Deleted_User said:

They don't make any extra profit by holding customer money, and it's actually a liability on their balance sheet.

So how does that work then? A liability on one balance sheet must be a credit on someone else's. Whose?

[Deleted User] said:

You don't, OFGEM will not accept complaints from the public

You are right - Ofgem does not deal with individual complaints; however, it will accept ‘evidence’ of any breaches of its guidance and Regulations. The ‘evidence’ is passed on to its Compliance Unit. 

Consumer.affairs@ofgem.gov.uk is the contact email address.

Thanks for that Dolor, your's was the kind of helpful information I was hoping for.

I will be forwarding my "evidence".