Direct Debit Abuse

Robindesbois

Energy Nightmares. The summer before the onset of the pandemic our imperial gas meter was changed for a metric one. By the November Bristol Energy went into administration the ombudsman failed to resolve the problem of the meter change. Meanwhile I had created a spreadsheet recording every aspect of consumption and billing which revealed that the direct debit  of £169.00 imposed by Bristol Energy exceeded the required amount of £105.00 The first of December I cancelled the direct debit and was still in credit by the time British Gas took over as our energy supplier (No choice). Subsequently I decided to pay three monthly by debit card because I can no longer trust energy suppliers. Why can't I make monthly payments by standing order without losing the discount offered for direct debit payments? Is it because British Gas in particular simply want to dip their hands in my pocket with impunity? I guess that most people probably don't get it.

MikeJXE

I tried that with OVO and they would not give me the same discount on a standing order as they do on a Direct Debit

Could. It be they cannot change a standing order at will but they can a direct debit ?

Krakkkers

Because a standing order is not a direct debit and the discount is for direct debit not standing order.

DullGreyGuy

Robindesbois said:

Why can't I make monthly payments by standing order without losing the discount offered for direct debit payments? Is it because British Gas in particular simply want to dip their hands in my pocket with impunity? I guess that most people probably don't get it.

Same reason you cannot get the new customer discount after being a customer for 20 years or the free birthday drink 365 days of the year... you dont meet the terms of the offer.

Given the Direct Debit Guarantee its hardly with impunity however should prices or consumption increase significantly with a SO the supplier has the same challenges of any other form of payment other than DD/CPA of having to chase you to update it and make up the arrears whereas with either a DD or CPA the merchant can make the adjustment to ensure you dont get into arrears.

It sounds like you didn't understand the DD scheme with your prior energy supplier however. The very idea of having a flat DD is that you overpay in summer (as you say you did) so in winter when bills are typically higher you are underpaying. Average out the two and you are neutral. Depending on when you join a supplier that may mean building a nest egg and then erroding it or running up a debt and then repaying it. Unsurprisingly companies prefer one more than the other. 

pochase

If you pay by DD the supplier "asks" for the money for your energy account, the money is automaically allocated.

If you pay by standing order somebody at the supplier needs to allocate your payment manually to your energy account.

So you get a discount on DD because there is less administration (cost) involved for the supplier.

Gerry1

The simple solution is to choose Monthly Variable Direct Debit so that you pay for exactly what you have used, not a penny more, not a penny less.

You'll still get the DD discount and be able to use the DD Guarantee to reverse the transaction if they get it wrong.

BG offer MVDD but apparently only if you are on their old billing system.  However, many other suppliers offer MVDD.

Of course, you get lower bills in summer but higher ones in winter.

Robindesbois

I've always understood the stated principal to determine the average monthly payment, but if you read the OFGEM documents they seem to suggest that they assess annual consumption to some sort of general formula based upon average consumption for a specific type of property along with the number of residents which may bear no relationship to the households reduced consumption/smaller number of residents. Concerning staffing costs of handling billing,  it's a pretty poor show if their IT systems can't cope with a variety of modern payment methods, most other online businesses do. Cheques and cash being the exception.

MattMattMattUK

Robindesbois said:

I've always understood the stated principal to determine the average monthly payment, but if you read the OFGEM documents they seem to suggest that they assess annual consumption to some sort of general formula based upon average consumption for a specific type of property along with the number of residents which may bear no relationship to the households reduced consumption/smaller number of residents. 

The property/area data is used in the absence of individual customer usage data, where they have adequate historical customer usage data they use that.

Robindesbois said:

Concerning staffing costs of handling billing,  it's a pretty poor show if their IT systems can't cope with a variety of modern payment methods, most other online businesses do. Cheques and cash being the exception.

They do accept "modern" payment methods, card payment and Direct Debit. They can "cope" with Standing Orders, which are not modern, but unsurprisingly if one does not pay by Direct Debit one does not get the Direct Debit discount. Also most other online businesses do not accept standing order, which is also not a modern payment method.

70sbudgie

I am with Octopus and I have noticed that although they seem to use the same calculation for a DD value, I have had no issue with setting my own DD value - which takes into account variables that the general calculation doesn't - like income from PV and energy efficiencies that have a significant effect (my gas usage has a year on year reduction of between 500kWhrs and 1000kWhrs so the DD calculation is always at least a year or two behind)

EssexHebridean

You'll find that a large umber of people here do "get it" - but that means they actually understand how the system works, so it may well be that them "getting it" means that you won't get a tide of wholesale agreement that all energy companies are money grabbing sharks making gazillions in profits - because that simply isn't true. 

Standing orders aren't particularly modern. For the energy companies they have to deal with SO's in pretty much the same way as they do payment on receipt of bill - and that is - whether you like it or not - more costly for them to process than DD payments. 

The supplier has a duty of care to ensure that the DD payments they set are "reasonable" so if you can do some accurate calculations that confirm that you should be paying a lower amount, there is a good chance that if you call them and put your case to them politely - leaving out any "money grabbing shark" type inferences - that they will see your point and be willing to agree to a reduced sum. otherwise, a variable DD where you pay each bill in full by DD as it occurs is the cheapest and easiest route if your household budget and your energy supplier can both handle that option. 

[Deleted User]

70sbudgie said:

I am with Octopus and I have noticed that although they seem to use the same calculation for a DD value, I have had no issue with setting my own DD value - which takes into account variables that the general calculation doesn't - like income from PV and energy efficiencies that have a significant effect (my gas usage has a year on year reduction of between 500kWhrs and 1000kWhrs so the DD calculation is always at least a year or two behind)

Octopus updates the annual estimate on every monthly bill based on what has been consumed from the Grid. In that regard, it does take into account consumer energy efficiencies and solar output. Yes, you are correct in saying that the calculations are always done looking in the rear view mirror: Kraken has yet to be given psychic powers.