Standing Charges and Prepayment meters

wild666

Gerry1 said:

If dozy Ofgem were any good, they'd prohibit PAYG rates being more expensive than the DD rates.

Any additional running costs must be negligible with modern meters.  The supplier also benefits by (i) receiving payment before the energy is used, (ii) customers not able to build up debt by submitting low meter readings and (iii) customers not quitting the premises without paying the final bill.

IMO with smart meters and just going online to top up any credit the costs to the supplier will be minimal. I worked out, using the EDF rates, that if I used 100kWh gas per day in winter and 5.2kWh of electric I would pay over 45p per day more per day. 

MattMattMattUK

wild666 said:

Gerry1 said:

If dozy Ofgem were any good, they'd prohibit PAYG rates being more expensive than the DD rates.

Any additional running costs must be negligible with modern meters.  The supplier also benefits by (i) receiving payment before the energy is used, (ii) customers not able to build up debt by submitting low meter readings and (iii) customers not quitting the premises without paying the final bill.

IMO with smart meters and just going online to top up any credit the costs to the supplier will be minimal. 

Best case with a card they will be paying around 10p and 0.9% of the transaction value (including the VAT), on some they could be paying higher.

wild666 said:
I worked out, using the EDF rates, that if I used 100kWh gas per day in winter and 5.2kWh of electric I would pay over 45p per day more per day. 

100kWh per day? That is an insanely high amount.

EssexHebridean

I doubt many are are carryig that much credit and if they are, then they must be like me, getting naff all from our current account but never had less than 20k in our joint current account as we both just feel comy with it but aware we could easily lock away in fixed rates at close to 4% - we are what we are.

This is a good summary of why making variable DD the standard would be massively dangerous IMO. In real terms, most people are simply not wealthy enough to be able to view a sum of 20k as the sort of small change they just leave in a current account - indeed, for a lot of those who post here that is a figure they will simply never have saved, and even a £20 cushion in a current account would be a luxury! For anyone reading who isn’t aware - there is absolutely no reason to leave this sort of sum of money earning nothing in a current account these days - all banking institutions have easy access accounts linked to current accounts - and a few simple clicks could put the surplus funds somewhere where they would be earning at least a little more - maybe anything up to 2.25%, depending on provider. (In fact more even than that with some specialist accounts). They would still be easily transferable back in an instant. Absolutely an “emergency fund”  is an essential - should it be left in your current account? Absolutely not. Plenty of good advice on this available on the banking board though.

I think we need to remember here that this isn’t a case of people being “silly enough” to spend the money they should be using for energy - it’s that for decades our financial education in this country has been woeful - while children may have been taught about APR/AER they are rarely taught as I understand it about the impacts that charged interest can have, and still more rarely taught how to avoid needing to take “bad debt” in the first place. A person cannot know what they have never learned - and it often takes a certain sequence of events to really focus them on learning about budgeting, saving and spending balance etc. if someone grows up in a hand to mouth household (for whatever reason) then they understandably see that as the way things are, and think nothing of it when that happens to them. variable DD as default might work in the future, but first we need to be confident that the default level of financial education equips the vast majority with the skill set to cope with it, IMO. 

diystarter7

wild666 said:

Gerry1 said:

If dozy Ofgem were any good, they'd prohibit PAYG rates being more expensive than the DD rates.

Any additional running costs must be negligible with modern meters.  The supplier also benefits by (i) receiving payment before the energy is used, (ii) customers not able to build up debt by submitting low meter readings and (iii) customers not quitting the premises without paying the final bill.

IMO with smart meters and just going online to top up any credit the costs to the supplier will be minimal. I worked out, using the EDF rates, that if I used 100kWh gas per day in winter and 5.2kWh of electric I would pay over 45p per day more per day. 

Hi

Thank you for that
Excellent post.
!45p a day" may not seem a lot to many here but those living hand to mouth, its a difference between eating and not eating for at least one person.

Thanks

MattMattMattUK

diystarter7 said:

wild666 said:

Gerry1 said:

If dozy Ofgem were any good, they'd prohibit PAYG rates being more expensive than the DD rates.

Any additional running costs must be negligible with modern meters.  The supplier also benefits by (i) receiving payment before the energy is used, (ii) customers not able to build up debt by submitting low meter readings and (iii) customers not quitting the premises without paying the final bill.

IMO with smart meters and just going online to top up any credit the costs to the supplier will be minimal. I worked out, using the EDF rates, that if I used 100kWh gas per day in winter and 5.2kWh of electric I would pay over 45p per day more per day. 

Hi

Thank you for that
Excellent post.
!45p a day" may not seem a lot to many here but those living hand to mouth, its a difference between eating and not eating for at least one person.

Thanks

This is just not a sensible position. Someone using 100kWh of gas and 5.3kWh of electricity a day is a very high user of gas, they would be paying £12.81 per day on Direct Debit or £13.29 per day on PAYG, however that usage would put them in the very high user group and it is unrealistic to think that someone spending £412 pcm on energy due to huge gas usage would not be able to cut back enough that they are unable to afford to eat. 

t0rt0ise

Gerry1 said:

Marvel1 said:

Gerry1 said:

If dozy Ofgem were any good, they'd prohibit PAYG rates being more expensive than the DD rates.

Any additional running costs must be negligible with modern meters.  The supplier also benefits by (i) receiving payment before the energy is used, (ii) customers not able to build up debt by submitting low meter readings and (iii) customers not quitting the premises without paying the final bill.

Also it's the DD customers in credit that get their money back when their energy form busted - the standing charge is included is paying this back - should be DD rates.

The cash/cheque customers are covering this too.

The problem would be much reduced if dozy Ofgem made Monthly Variable DD the default DD method, with Fixed MDD only available on request.

It would significantly reduce failures by deterring Ponzi companies financing their growth via stupidly inflated DDs and mean that if any did still fail then the SoLR costs would be much reduced.

I would prefer that fixed DD be the norm as now and the suppliers be forced to ringfence the money and only draw on it when bills are issued. If the DD money were kept totally separate from other company funds, in the case of the supplier going bust, the account containing that money should simply be passed to the SoLR company. Then we, the rest of the customers don't have to pay for refunds.

EssexHebridean

t0rt0ise said:

Gerry1 said:

Marvel1 said:

Gerry1 said:

If dozy Ofgem were any good, they'd prohibit PAYG rates being more expensive than the DD rates.

Any additional running costs must be negligible with modern meters.  The supplier also benefits by (i) receiving payment before the energy is used, (ii) customers not able to build up debt by submitting low meter readings and (iii) customers not quitting the premises without paying the final bill.

Also it's the DD customers in credit that get their money back when their energy form busted - the standing charge is included is paying this back - should be DD rates.

The cash/cheque customers are covering this too.

The problem would be much reduced if dozy Ofgem made Monthly Variable DD the default DD method, with Fixed MDD only available on request.

It would significantly reduce failures by deterring Ponzi companies financing their growth via stupidly inflated DDs and mean that if any did still fail then the SoLR costs would be much reduced.

I would prefer that fixed DD be the norm as now and the suppliers be forced to ringfence the money and only draw on it when bills are issued. If the DD money were kept totally separate from other company funds, in the case of the supplier going bust, the account containing that money should simply be passed to the SoLR company. Then we, the rest of the customers don't have to pay for refunds.

I believe it was established recently though that overall that would not be in the best interests of the customer as it would increase prices. 

diystarter7

t0rt0ise said:

Gerry1 said:

Marvel1 said:

Gerry1 said:

If dozy Ofgem were any good, they'd prohibit PAYG rates being more expensive than the DD rates.

Any additional running costs must be negligible with modern meters.  The supplier also benefits by (i) receiving payment before the energy is used, (ii) customers not able to build up debt by submitting low meter readings and (iii) customers not quitting the premises without paying the final bill.

Also it's the DD customers in credit that get their money back when their energy form busted - the standing charge is included is paying this back - should be DD rates.

The cash/cheque customers are covering this too.

The problem would be much reduced if dozy Ofgem made Monthly Variable DD the default DD method, with Fixed MDD only available on request.

It would significantly reduce failures by deterring Ponzi companies financing their growth via stupidly inflated DDs and mean that if any did still fail then the SoLR costs would be much reduced.

I would prefer that fixed DD be the norm as now and the suppliers be forced to ringfence the money and only draw on it when bills are issued. If the DD money were kept totally separate from other company funds, in the case of the supplier going bust, the account containing that money should simply be passed to the SoLR company. Then we, the rest of the customers don't have to pay for refunds.

Hi
Seems like an excellent idea and one that millions will agree with.
Thanks

MattMattMattUK

diystarter7 said:

t0rt0ise said:

Gerry1 said:

Marvel1 said:

Gerry1 said:

If dozy Ofgem were any good, they'd prohibit PAYG rates being more expensive than the DD rates.

Any additional running costs must be negligible with modern meters.  The supplier also benefits by (i) receiving payment before the energy is used, (ii) customers not able to build up debt by submitting low meter readings and (iii) customers not quitting the premises without paying the final bill.

Also it's the DD customers in credit that get their money back when their energy form busted - the standing charge is included is paying this back - should be DD rates.

The cash/cheque customers are covering this too.

The problem would be much reduced if dozy Ofgem made Monthly Variable DD the default DD method, with Fixed MDD only available on request.

It would significantly reduce failures by deterring Ponzi companies financing their growth via stupidly inflated DDs and mean that if any did still fail then the SoLR costs would be much reduced.

I would prefer that fixed DD be the norm as now and the suppliers be forced to ringfence the money and only draw on it when bills are issued. If the DD money were kept totally separate from other company funds, in the case of the supplier going bust, the account containing that money should simply be passed to the SoLR company. Then we, the rest of the customers don't have to pay for refunds.

Hi
Seems like an excellent idea and one that millions will agree with.
Thanks

So you wish to push everyone's bills up further? As Essex has already pointed out ring fencing was indeed looked at and it was established it would increase bills, from memory 2-5% on an ongoing basis. They does not mean that there should not greater regulation of finances but remember that the reason those energy companies went bust is because the government forced them to sell below cost for nearly a year rather than any particular flaw in their business model.