Energy how do they justify your DD increase

[Deleted User]

Wouldn't "review every month" defeat the purpose of fixed direct debit though?

EssexHebridean

deano2099 said:

EssexHebridean said:

Right - so in fact they don't actually know what your usage is, and so can only base their calculations on what they estimate you might use. Can they just accept at face value what you are telling them you will use?

But in this case there's three other things acting here.
a) the OP has more data on past usage than they have, which he has offered to share But as stated, they're unlikely to accept either "here's what I think I'll use" or "I'm cutting down". 
b) he's currently in credit, and  Nowhere near enough credit to stop him heading into debt very soon, allowing that he's not even been billed for the first cold period of th winter yet, and we could have a good deal more of that coming.
c) it's the start, not the end of winter.  Not quite sure what the argument is here? That he's only in 1 x month's DD (roughly) at the start of winter just underlines my response to your point b above, surely? 

This argument works if it's summer and the customer is saying "well I'm going to use less next winter, so I want a lower direct debit now". That's a risk for the company, as the customer may not build up enough credit to cover them for the winter, then not be able to afford the inevitable extra payment or significantly increased direct debit. And the regulators want energy companies to avoid that.
But it's not summer right now. It's the start of winter. The high usage period is *right now* - so they will find out pretty sharpish if the OP is wrong in his estimates (assuming monthly readings/smart meter). So I'd say yes, they should just take him at his word, and if the figures over the next month don't reflect what he told them, take action at that point. They're not carrying £500+ of risk there like they would be if it was March. They're carrying the £60 extra for one month. And putting that £500+ risk on all of us instead (as if the OP is correct, it'll build up as credit in his account, and if the company fails, that credit balance is protected and SOLR - ie our bills - pays for it).

This can work the other way around instead. They could say "well pay the £150 this month but if your usage next month reflects what you've told us, we'll recalculated it then" meaning they're carrying no risk at all. The problem here is energy companies being unwilling to review accounts more often than every 6 or 12 months. There should be something in place where if actual usage data is sketchy, and the customer and energy company disagree significantly on predicted usage, that it just gets reviewed every month. It doesn't even need human intervention - a computer can see pretty damn quick if the usage estimates are significantly out. (And I'd bet when those usage estimates are higher than the energy company estimated, said computer will flag that account up for an early review pretty damn quick).

(Disclaimer to add: this is all dependant on, ideally, smart meters. Or at least the customer providing regular meter readings)

Comments in bold. 

matt_drummer

I am sorry MikeJXE.

I based my calculations on the January 2021 to January 2022 usage.

Sea_Shell

[Deleted User] said:

Wouldn't "review every month" defeat the purpose of fixed direct debit though?

Well it would if you're 100% sure of what that fixed DD should be.

Some of us can make a good stab at what we expect our annual usage to be, going by our historical data, but none of us have a crystal ball.

If in any doubt, keep an eye on it to make sure you're on track.

MikeJXE

I have a smart meter and an IHD which is switched off. I follow my data on OVO website my account.

I even check their meter readings with my own viewing here.

I am not complaining about the coast of energy, it is what it is and we have to pay, my preferred method would be whole payment to OVO even hourly of thats what they wanted at least then I would be paying only for what I use instead of what someone calculates  might be as facts. 

No one can predict what summer or winter weather is going to be so it's not fair to factor in prices because it might be colder.  If you read the news we are heading for a warmer world so why not factor in using less energy ? 

I am 82 years old on state pension, paid my mortgage off many years ago. I have not been in debt since, except when covid hit us and I then used credit card which is payed off automatically monthly. 
I'm nor rich but not poor, I give myself maybe 20 years or less or more depends how lucky I am, I have savings that will get me through the next few winters however much prices rise 

I just don't think it's fair the energy companies increase DD willy nilly and I don't want to be one of those who build up a large credit and the company goes bust. I know we are covered but that don't mean it's right. 

MikeJXE

Sea_Shell said:

[Deleted User] said:

Wouldn't "review every month" defeat the purpose of fixed direct debit though?

Well it would if you're 100% sure of what that fixed DD should be.

Some of us can make a good stab at what we expect our annual usage to be, going by our historical data, but none of us have a crystal ball.

If in any doubt, keep an eye on it to make sure you're on track.

Thats exactly what I do, keep my eye on my usage.

Last year I used my heating whatever I thought I needed because it was cheap, usually when my temperature got below 21 degrees, now I use it when I get cold and bump it up to 19. I input all my usage on a spreadsheet and I can see my usage is less this year than it was last,  January and February are still to come but I am confident I will use less 

Gerry1

MikeJXE said:

I am not complaining about the cost of energy, it is what it is and we have to pay, my preferred method would be whole payment to OVO even hourly of thats what they wanted at least then I would be paying only for what I use instead of what someone calculates  might be as facts.

Unfortunately Ovo don't offer Monthly Variable Direct Debit. The answer is to switch to one of their competitors who do !

pseudodox

MikeJXE
Vote with your feet like I did.  I was in same postion beginning of October with SSE (after 17 years as their customer) who said they were moving me to OVO.  I have always paid quarterly whole bills by DD so benefitted from the DD discounted prices.  On my October bill SSE predicted my next 12 months energy usage, based on past use and as I keep careful records I agreed their figures and knew I had to budget for the price increases by trying to cut some of my already careful usage.

OVO do not offer whole billing so they informed me what my new fixed DD would be - a whopping 29% of my monthly income and based on DOUBLE my well documented historic consumption (kWh not ££)!  I argued, they refused to accept the offer of what I could reasonably afford to budget for.  I went on to my account and lowered the DD amount, they put it back up again.  So I walked.  Went over to EDF who are not only allowing me to pay monthly by DD for whole bill amount but in case I don't submit readings (not on smart meter yet) will take a default fixed DD of almost half what OVO insisted they needed me to pay "to avoid getting into debt".  
  
I do not need some corporate entity to manage MY finances!  I have never been in debt, I get by on income only from the state pension plus the WFA, the £150 council tax refund and the £400 we are now getting.  I don't regard my winter bills for energy as high, I regard my summer bills as low!  Attitude of mind which means I have more to spend in summer on other things (might even manage a holiday).  I accept prices can only go up.  Then non-essentials like holidays will have to go.

It seems EDF were able to set the FDD amount based on my past usage with SSE, whereas OVO refused to even consider this!  Like you I wanted my money in my account under my control.  Moving to EDF was as simple as making a phone call, submitting readings and letting them get on with it.  I believe Octopus might also be taking on new customers, but again it has to be done by phone AFAIK.

MikeJXE

These are my next steps, I am in rented and the contract forbids moving energy supplier so I will seek agreement

I also found out my boiler has pre heat that cannot be switched off so when I don't need heat or water I switch the boiler off at the wall. That is a saving in itself as it doesn't cut in every 90 minutes 24 hours a day. 

Yes I know there is a disabling work around for that but why should I have to pay? 

Gerry1

MikeJXE said:

I am in rented and the contract forbids moving energy supplier

That's unlikely to be enforceable.

https://www.citizensadvice.org.uk/consumer/energy/energy-supply/get-a-better-energy-deal/switching-energy-supplier-if-youre-a-tenant/