Direct Debit and Credit with company ...

RJames

It seems that that the energy companies lack trust in their customers as insist on a credit being in an account and if it is not then the energy company will increase the DD without direct consolation/ permission with the bill payer.  A bill payer's history of good credit, regular payments isn't enough to prove they will always have the funds to pay the bill.  If the energy companies are not paying interest or offering discounts on the credit balances, then there is little incentive for a bill payer to be in credit with the energy company - interest rates are rising and so their money is better off elsewhere and pay the bill when it arrives without this penalisation of auto increases to DD. 

The lack of trust in the energy companies does appear to be stemmed from their own greed and misplaced distrust of honest and trustworthy customers. Perhaps DD is not the best way to pay any more?  

BUFF

For most suppliers DD will get you the cheapest rates.
Companies are required to inform you of a change to DD (but that can be in your online account rather than an email)  & you have the ability through the DD Guarantee to claim back.
Some suppliers allow a Variable DD where you only pay for what you use on a monthly basis as opposed to Fixed DD where your monthly payment is your annual usage/12.

I may be wrong but I believe that the government have told the suppliers to  tighten up payments so that people don't go into debit.

pochase

From your post 

https://forums.moneysavingexpert.com/discussion/comment/79522439/#Comment_79522439

it seems you are already in debt now at the beginning of winter. This is at a time where you should be in credit by a substantial amount to make up for high winter bills.

Without your supplier increasing the direct debit how are you expecting to pay for the increased energy for the next months?

400ixl

The Energy suppliers are also constrained by what the government and OFGEM are requiring of them, so much of it is not lack of trust. They are instructed that people on fixed direct debits should not be in debit from a point of view of their averaged use across the full year. As such a customer will need to be in credit when they come into the winter months.

If you want to pay your bill as you sue it, then you need to be on the alternative payment method of variable DD which bills you for actual usage each month. This is a standard offering from many of the Energy providers.

The variable DD is something that less customers want to have as they want the certainty of knowing how much is going out each month. So they do exactly what you are asking for, it is just not what most people want.

Go and speak to your supplier if they do variable DD.

EssexHebridean

For the vast majority of people, DD is the best way to pay as this usually gives access to the best prices. For those who have a good handle on their household budgets, and sufficient reserves to cover the "peaks and troughs" of their monthly use, a variable DD option might well work best -  this is where the customer gives a meter reading and then the supplier will raise a bill each month and then take the whole amount owing on that bill by DD. For those who either don't have the flexibility within their budget to cope with far higher bills for 4 - 5 months of the year than the remaining months, then a standard DD where the expected annual cost is split over the full year by way of 12 even payments is probably the simplest. This is also realistically the "safest" method for anyone who doesn't have a good grasp on their household budget for whatever reason. 

It used to be that the general rule was that ahead of the winter months the supplier would expect to see a reasonable "cushion" of credit to see the user through the first part of winter - with a further  expectation of them ending the higher-use winter months in a little debt. The payments through the summer then returned the account to credit ahead of the new cycle of colder weather = higher bills. In recent times it seems that a number of suppliers have gone over to a model where they work on an annual cycle regardless of where in the year that starts though, and this can be confusing - understandably so if for example your "year" starts in the autumn, and so you get no chance to build up a cushion ahead of the higher bills starting. (For the same reason it's usually advised that this is not a good time of year to switch to variable DD unless you have already put in place a "buffer" of savings to see you through those first months). My suspicion is that this has occurred due to the higher number of people switching energy suppliers over the past 10 years or so - it became impractical to apply the same "in credit in October, in debt in March" model across the board.

For every customer (1) who manages their use well, takes the time and effort to read their meters, engage with their supplier and check bills and keeps a good awareness of their actual energy use and the cost of that use, there is probably a corresponding Customer (2) who won't bother opening bills, assumes that the energy company will come and read their meter if they want a reading, thinks that they will only get charged £2500 regardless of how much energy they use, and couldn't begin to tell you how much energy they actually use in a year. If you fit the model of customer 1, then a standard DD payment should reflect your actual costs - and if the supplier tries to increase it to a level that is unreasonable, customer 1 will also understand that they can contact the supplier, ask for it to be reduced to a reasonable level, and if that is refused then they have a right to take that request- and the evidence to back it up - to the Ombudsman once the requisite period has passed (or a deadlock letter is forthcoming). 

QrizB

RJames said:

The lack of trust in the energy companies does appear to be stemmed from their own greed and misplaced distrust of honest and trustworthy customers.

On the other hand, there are far more untrustworthy customers than there are untrustworthy energy suppliers.

CKhalvashi

I'm known to 'DD massage' through the year to ensure a large credit (or debit) balance doesn't build, but have never gone 'overdrawn' on a balance for energy. As a household our income and therefore budget is largely focused around certain parts of the year (mainly contract completion dates, which are in the same 5-6 week periods for the largest 2), however over the course of several years this does even itself out.

Energy is a priority debt and therefore is one that should always be paid. I have to agree with everything Qriz says on this case.

RJames

Some very good points.  

It really shouldn't matter how little or how much a customer is in credit by, for an energy company to say they will automatically increase a DD is wrong.  I understand it fair to do so if the customer actually was in debit - but for a customer with any credit, no matter how little it is really quite cheeky to increase DD.  I have not increased by DD and neither will the company - DD is still slightly better way to pay.   Variable DD is not something I require.  I am happy to be a customer with a set DD and keep account in credit.  

Energy companies should only be allowed to increase a customer's DD if the customer actually is in debit, not because the energy company thinks the credit is too low; this is contributing to the untrustworthy nature with industry relationships with customers. 

molerat

I am currently £500 in credit.  Based on current rates by January I will start going into debit and will stay that way until around June when I will start to build up a credit balance again.  That is how a budget DD works and is perfectly normal, if a customer does not have enough credit to balance the books by a certain point then of course it is reasonable to increase the DD.

sandy700

I was in credit and I couldn't get it refunded so I changed to a variable direct debit, I didn't have a direct debit taken this month and next month I have worked out I shall only need to pay a £3 direct debit.

Then of course the next month I will have to pay for what I use but it will still be less than what they wanted my direct debit to be.

And my energy company does not have any of my money as credit.

RJames

sandy700 said:

I was in credit and I couldn't get it refunded so I changed to a variable direct debit, I didn't have a direct debit taken this month and next month I have worked out I shall only need to pay a £3 direct debit.

Then of course the next month I will have to pay for what I use but it will still be less than what they wanted my direct debit to be.

And my energy company does not have any of my money as credit.

DO you mean that you have a standing order now?  I have tried to do this with direct debit but the energy company said it was not possible?! I have asked for explanations, and they are unable to provide.