Direct debits to energy companies seem to be some sort of scam

harryhart

Sorry, this is rather lengthy.   I hadn't realised that my energy company was charging me extra  (around £60 a year) for the "privilege" of not paying by direct debit.   This is a copy of the email I recently sent to them.    (Their reply was about completely different things from the points I raised.)  I would be grateful for anyone elses's thoughts.   Thanks.    (Of course, this is aseparate matter from direct debit overcharging!)

"Thank you for your letter of 31 March, which I received yesterday (4 April). 

To be honest, I hadn’t been aware that I had been charged extra because I did not pay by direct debit.   Your letter mentions that this fact “adds significantly to the admin and costs of supplying energy to you”.   Quite frankly, this sounds like complete balderdash.

First of all, let me point out that since the start of my account with Xxxx, I have always reliably taken my energy readings on the 19th of each month.   I would assume  that having, or not having, a direct debit is immaterial.

Secondly, I pay a substantial contribution  by debit card immediately before taking my meter readings, which updates my Xxxx account immediately, so I am mystified as to what admin costs are incurred here.   (This keeps it permanently in credit.) Perhaps you could enlighten me?  To me, it would seem that running a direct debit collection system would be more complex and costly to run than this simple operation.

Thirdly, I would point out that if you need to save on administration costs there are two things that immediately spring to mind:

1. Stop sending me printed bills which I don’t need, as everything is available online (which is great)

2. Stop sending me email reminders about taking meter readings, as this is clearly marked on my Google calendar, which I constantly check,  and have never missed a reading so far.

Finally, there has always been a healthy balance on my account, so I think that really Xxxx should consider themselves fortunate

I would therefore suggest that you stop charging me penalty rates for not using the direct debit scheme, and give me correct energy rates immediately."

pochase

Sorry,but you got it the wrong way around.

You are paying the "normal" price, those who pay by direct debit get a discount. 

There are different caps from Ofgem for paying by direct debit or other payment forms, so this is not just coming from sujppliers, but is recognised by Ofgem.

GingerTim

The only way you will get the direct debit discount is, unsurprisingly, by creating a direct debit. 

Ayr_Rage

Sorry, but they will not change the Ofgem approved way the energy market works just because of your dissatisfaction.

If you want the discount for paying by DD then move to a supplier that offers Direct Debit Whole Amount Monthly, such as EDF.

I pay my bills monthly in arrears, get the DD rate and EDF never have any of my money in their account.

wild666

Start paying by DD then and if the supplier allows you to reduce the monthly DD do that until the credit is used then increase it again. 
I know, to within about 8 kWh how much my electric bill will be each month, with the gas it's a bit more complicated but if the supplier allows one off payments you could also use that if your monthly DD will not cover the monthly bill.

Astria

There's something far simpler than your "simple operation". 

A meter reading could be taken automatically (once per month), the cost could be calculated automatically, and you could be billed and the amount taken automatically.

All the steps you are doing are actually costing you both time and money.

Credit and debit cards both cost substantially more than Direct debit payments to process, and on top of that is the maintenance of the infrastructure needed to support you paying by card.

If you want your energy cheaper, consider using a cheaper method to pay for it.

Chrysalis

The costs are likely along the lines that anyone who forgets to make a manual payment then has to be chased up, thats the costs.  So for those who keep up to date, I agree there isnt likely extra costs, but the costs are looked at from a perspective of "across the business".

Scot_39

pochase said:

Sorry,but you got it the wrong way around.

You are paying the "normal" price, those who pay by direct debit get a discount. 

There are different caps from Ofgem for paying by direct debit or other payment forms, so this is not just coming from sujppliers, but is recognised by Ofgem.

These days Ofgem publishes the Other Payment Method ahead of Standard Credit ahead of Prepayment in it's rate caps to suppliers - note that's not alphabetical.

The press - when it habitually rabits on about the mythical one and only £2500 EPG cap ( i.e. average EPG disconted pricing at TDCV) - are referring to the Direct Debit rates.

So arguably you can interpret that these days DD being the normal - and standard credit - paying a penalty - for the administration costs.

Energy companies are not the only ones to charge extra for bills or effecitively 3-6 months of credit in some cases.

gbhxu

I remember when I was working in retail in the early 2000s there was a big uproar about card surcharges. 
Surely the extra you pay per as a non DD payer is a surcharge?

Perhaps us non DD payers should charge an admin fee for making a payment and/or giving readings from our non smart meters because the electric companies can't be arsed to send round meter readers nowadays?

km1500

Paying by DD has always been a discount. Nothing has changed over 20 years or more.

Chrysalis

gbhxu said:

I remember when I was working in retail in the early 2000s there was a big uproar about card surcharges. 
Surely the extra you pay per as a non DD payer is a surcharge?

Perhaps us non DD payers should charge an admin fee for making a payment and/or giving readings from our non smart meters because the electric companies can't be arsed to send round meter readers nowadays?

Interestingly I had someone come round here a month ago to take readings, I have smart meters now, a family member with no smart meters hasnt had a meter reader for several years now.

But its still better than it used to be, when I was on legacy meters I had meter readers knocking on my door every other week, it was really aggressive.

I suspect the readers are an anti fraud measure and used in areas where they have higher levels of fraud.