British Gas suggesting ridiculously high direct debit

deano2099

So we bought a new property in July, moved in in October. Registered with BG as the existing supplier and kept them as there's no reason not to right now. Rather than set up a DD straight away, we figured we'd just pay on bill. Smart meters so we could see the cost of usage every month and put the money away, and figured as we weren't in the property the first three months the estimated usage would be way off anyway.

At this point, I figure, we should probably get a direct debit set up. Saves a few quid paying that way. So I click through and they give me the following DD prices:

Electricity: £132.71 / month

Gas: £325.72 / month
Total: £458.43 / month, £5501.16 / year

The electricity figure is reasonable. We use a pretty consistent 320kwh / month, about £110, with price increases likely coming that makes sense.
But the gas... our actual usage, I won't include Jul-Sep as that was unfeasibly low as we were weren't living there (and I stupidly thought "oh, I need to watch that they don't set our DD too low because of that"):
Oct: 325kwh
Nov: 1162kwh
Dec: 1580kwh
Jan (to date): 1711kwh

Heating turned on about a week in to November. So my reckoning says 4 winter months at around 1700kwh and 8 non-winter months at 320kwh - that's 9400kwh per year. If I ask Octopus to give me an estimate on that (and the electric) it comes out with a DD of £211.48. Which is probably not accounting for the 25% increase coming and is too low, but it does seem like BG is close to asking double my actual usage. I'm baffled as I can't figure out where their number comes from (and they provide no information on how they calculate it).

If the gas usage next week is the same as last week, January's gas spend will be £187. In a freezing cold January. Even if prices go up 25% that's £233, and if I were then to use that much gas every single month, even throughout summer, we'd still end the year with BG owing me £1000. I thought we might end up overpaying a bit, and was fine with that, they don't have much usage data for the summer, I get that. I didn't expect their estimate to be significantly more than "highest usage month x 12" though!

The bill was last paid this month to cover up to end of December, so it's feasible they're also factoring in 13 months of usage to clear the "debt" for January also, but I can't get anywhere near their figures.

My only guess is they're using data from the previous property owners, and the previous property owners were running the heating at 25C all year?

I'm mostly just curious how this happens, rather than looking for actionable help. I'll reach out to them and see if they can help, but it's frustrating as my first thought was "they're just trying to get me not to do direct debit as they make more money" but I don't even know if that's true. My second thought was to just switch to Octopus but we have the old style BG-installed SMETS1 smart-meter with the proprietary comms hub that hasn't been enrolled yet, and they're a pain to get to (behind the washer/dryer). Plus I like being able to actually monitor my energy usage on a regular basis because I'm a nerd and hang out here.

Astria

Since you are happy to "pay on bill" why not setup a variable DD rather than a fixed monthly budget DD?

That way, they get the usage from you/your meter, email you a bill, and automatically take the amount based on usage instead of some fictional value they've estimated.

deano2099

Do BG offer that? It wasn't an option in the account section of the website. I figured they were one of the suppliers that doesn't.

Jyana

They do on the older accounts, but not on the new style ones they are moving people over to from what people have been reporting on here lately, which I'm assuming you are on if it wasn't an option for you unfortunately.

dunstonh

So we bought a new property in July, moved in in October.

How much summer credit did you build up?  (i.e. at around Sept/early Oct)

Heating turned on about a week in to November. So my reckoning says 4 winter months at around 1700kwh and 8 non-winter months at 320kwh - that's 9400kwh per year. If I ask Octopus to give me an estimate on that (and the electric) it comes out with a DD of £211.48. Which is probably not accounting for the 25% increase coming and is too low, but it does seem like BG is close to asking double my actual usage. I'm baffled as I can't figure out where their number comes from (and they provide no information on how they calculate it).

Octopus are basing it on you paying for a full year and not having arrears to cover.
BG is also forward pricing and covering arrears.  Plus, 2022 was a very mild year.    They will be using modelling that is more to the average temperature.   Energy use due to mild weather has seen heating bills about 15%-20% lower than they would normally be.

BG will also be looking for you to build some Summer credit so you can cover Winter 2024 and not go into arrears (and allow your monthly direct debit to go back down again)

 even throughout summer, we'd still end the year with BG owing me £1000.

You generally look to end Summer with credit that is about 4-5 times your monthly heating bill. 75-90% of your hot water/heating energy use occurs in just 5 months of the year.  The other 7 months are you building credit  for those 5 months or breaking even 

EssexHebridean

Another thing to bear in mind is that currently it is probably wise to still anticipate a 20% uplift in prices in April - that may yet not happen, but I'm personally working on the better safe than sorry model! 

deano2099

dunstonh said:You generally look to end Summer with credit that is about 4-5 times your monthly heating bill. 75-90% of your hot water/heating energy use occurs in just 5 months of the year.  The other 7 months are you building credit  for those 5 months or breaking even 

No summer credit, we simply paid the six months July-dec bill in full at the start of Jan. Only arrears will be January. Adding that on then adding 25% still gets me nowhere near.
You may be right in terms of what is happening, would certainly explain it - that they're really looking at 18 months of usage (Feb-Feb then another six months at a higher rate to build up credit)
That's not actually how I understand it should work though. What they're meant to do, as far as i understand, is work out your expected usage over 12 months then divide by 12. This means if you start in November you'll build up debt with them then pay it off over summer, whereas if you start in March they'll build up debt with you, which is then used in winter.
Not saying you're wrong, it's the most plausible explanation I can find actually. I'm just not sure it's what they should be doing.

EssexHebridean

Have you checked with BG that they do work on a rolling year, rather than the old style seasonal year? While some suppliers do work on the basis of your year starting when you join them, they may not all. 

Brie

Very simplistically.....you've got reading for Oct to Jan so can you extrapolate a possible (possibley high as it's not summer) use from  that?  Potentially that will give you a DD that would possibly exceed your average annual use and that would be a good point to use to talk to the supplier.

deano2099

EssexHebridean said:

Have you checked with BG that they do work on a rolling year, rather than the old style seasonal year? While some suppliers do work on the basis of your year starting when you join them, they may not all. 

Ah, I didn't know that. Will look into it.

Related (although maybe a separate thread) - does anyone know if I switched suppliers, with an old un-enrolled SMETS1 meter - would my IHD just stop working? The monetary figures would be wrong as it wouldn't have the correct tariff, but would it still report usage? Or would the meter just stop transmitting to it? If I can get a meter read off the IHD still it makes switching more appealing!

EssexHebridean

I think it would lose the connection altogether - but don't quote me on that. Definitely not a reason to stick to a supplier that is not prepared to be reasonable about DD amounts though, and especially not if what you would really prefer is a variable DD when you simply [pay monthly for what you use.