MONTHLY DIRECT DEBITS AND WHAT IS A REASONABLE AMOUNT TO BE IN DEBT IN MAY

caro69

Xbigman said:

caro69 said:

MWT said:

It was never 'reasonable' to be in debt to the tune of several hundred pounds...

You do need to keep your Octopus account in credit at all times and so, yes I would be expecting your DD to go up, especially as the Government support has ended as well, but what matters is how much they want to raise it to, and does that equate to around 1/12th of a reasonable estimate of your annual use...

I beg to differ.  It certainly was reasonable to be in debt during the winter months and then in credit during the summer months.  That's how we evened out a regular 12 monthly payment.  The monthly payment is way over 1/12th of what i expect to pay over the next twelve months, so be careful guys, even Octopus seem to planning on boosting their bank balance over summer.  

If you follow you idea of always being in credit you might as well pay the full every time they bill you.  Completely goes again the idea of having a regular monthly payment.  

As to your first point, you didn't actually tell us how much you were being asked to pay or what you thought it should be. How is anyone supposed to make a judgement with zero information. 

Your second point is a good one, which is why many on this board pay by variable monthly DD and think this should be the default option. Me included.


Darren

Darren, not asking for anyone's judgement on my case here.  Just putting it out there.  If the idea is to always keep your account in credit then was has MSE's advice not been to save into a interest bearing account to smooth the payments ourselves?  

caro69

dunstonh said:

MONTHLY DIRECT DEBITS AND WHAT IS A REASONABLE AMOUNT TO BE IN DEBT IN MAY

Aptril/ May is the time when you should be around zero.  Anything from this point on should be building summer credit for the next winter.

So, traditionally I am sure at the end of Winter beginning of Spring/Summer it was reasonable to be several hundred pounds in debt to your energy provider. 

No. Being in debt with a utility company was not reasonable.

 I am only £19 in debit to Octopus at the moment but they want to raise my DD.  Is this them trying to build their bank balance up rather than mine?

2022 was a drought year and extremely mild.  Heating use was around 20% down across most of the UK.  So, if you are still in debt by May, albeit by a tiny amount, then it is reasonable to pay a bit more as this year may not be a drought year.    However, the unknown bit is the next quarter pricing.   You may get lucky but they dont know that and are working to current levels.

I beg to differ.  It certainly was reasonable to be in debt during the winter months and then in credit during the summer months.  That's how we evened out a regular 12 monthly payment.  The monthly payment is way over 1/12th of what i expect to pay over the next twelve months, so be careful guys, even Octopus seem to planning on boosting their bank balance over summer.  

The aim was to build credit over summer which you could use over winter.  Not in reverse.

If you follow you idea of always being in credit you might as well pay the full every time they bill you.  Completely goes again the idea of having a regular monthly payment.  

Monthly payments are there to help people budget.  Not to borrow money from the energy supplier.

You say that being in debt to a utility company is not reasonable but whey should being in credit to one to reasonable?

If monthly payments were there to help people budget then why did MSE never suggest that people put their monthly payments into an interest bearing account rather than give it to the energy companies in advance?  

You've been around these parts for a long time.  I thought you would have some memory of these things.

caro69

And before I leave this thread . . . think on this.  If you choose not to pay by direct debit you are penalised and pay more for your energy.  The energy companies want your money and they want it now.  They will penalise you if you decide to budget yourself.  All of the contributors above are advocating paying in advance for an essential service.  This goes totally against what MSE has been fighting for all these years isn't it?   

MWT

caro69 said:

You say that being in debt to a utility company is not reasonable but whey should being in credit to one to reasonable?

This is something you agreed to when you first joined Octopus.

From the T&C ...

"When paying by direct debit:

1. (i) you should keep your account in credit and (ii) we will track and carry the balance forward to the next month's Statement of Account"

I've been around these things for a long time as well, you are remembering how things were some time ago, but not how they have been since deregulation and the new suppliers entered the market.

Octopus are reasonable about this, and as long as you do keep the balance positive they will usually let you set your DD as you wish.

caro69

MWT said:

caro69 said:

You say that being in debt to a utility company is not reasonable but whey should being in credit to one to reasonable?

This is something you agreed to when you first joined Octopus.

From the T&C ...

"When paying by direct debit:

1. (i) you should keep your account in credit and (ii) we will track and carry the balance forward to the next month's Statement of Account"

I've been around these things for a long time as well, you are remembering how things were some time ago, but not how they have been since deregulation and the new suppliers entered the market.

Well sadly I was moved to Octopus because my supplier went bust so I had no choice.  I paid by direct debit because like millions of others I would have had to pay more for the energy if I didn't.  Can you see how we are all being steamrollered into propping up the bank balances of these energy companies.  I rest my case.

Spoonie_Turtle

caro69 said:

And before I leave this thread . . . think on this.  If you choose not to pay by direct debit you are penalised and pay more for your energy.  The energy companies want your money and they want it now.  They will penalise you if you decide to budget yourself.  All of the contributors above are advocating paying in advance for an essential service.  This goes totally against what MSE has been fighting for all these years isn't it?   

Not all of them, because you can pay by variable Direct Debit which gets you the DD discount but allows you to put money aside in summer, earning interest, that you can then use to pay the higher bills in winter.  Octopus is one of the suppliers that offers this payment method.

It's not actively recommended because people can struggle with not touching available funds, especially if things are tight and an unexpected expense that they can't otherwise afford pops up.  Some people cannot budget so tightly to afford extra outgoings in winter on the same income as summer.  So recommending it could be dangerous for the most financially vulnerable people (by which I mean those who find it difficult to make good decisions with money, rather than necessarily at any particular income level).  But it is an option that some people can make good use of.

If you make sure your balance with Octopus is pretty much always in credit - and you can make a £20 one-off payment to rectify yours right now - they tend to be pretty flexible with their DD amounts.

Gerry1

@caro69 is absolutely correct, originally the Fixed DD idea was that sometimes you were in credit and sometimes you were in debit.  It all came out in the wash and neither party benefitted at the expense of the other.

With privatisation, some companies saw this as a way to get a sizeable interest-free loan and / or a dodgy way to fund their business, Ponzi style.  They quietly increased the DDs to give a permanent credit balance, some even making it part of their Ts & Cs.

Needless to say, dozy Ofgem was asleep as the wheel as usual, around 30 companies went bust when the going got tough, and we all ended up paying much higher standing charges.

If Ofgem were any good they'd insist on all DDs being monthly to minimise confusion and bill shock, as well as making MVDD the default (with an easy opt-out).  But don't hold your breath...

meat2veg

All of these answers are opinions. God says never be in debt. But, if you are in credit then the company concerned should always give you a reasonable credit for your credit account. 

From my point of view if you are in debt then an increase is inevitable but only to your manageable debt control. If you are unable to pay your debt then turn it off. But,  there is another issue paying for a dumb meter. That’s truly unfair as you have to have the amount calculated but that is by the supplier’s choice not yours. So you should not have to or expect to pay whenever no use occurs. That is a reasonable assumption but the law allows this abominable practice of theiving when no use occurs. 

Smart meters are not smart as over 60% are disfunctional. 

BikingBud

caro69 said:

Ok.  So, traditionally I am sure at the end of Winter beginning of Spring/Summer it was reasonable to be several hundred pounds in debt to your energy provider.  The idea being that over summer credit would build for next Winter.  I am only £19 in debit to Octopus at the moment but they want to raise my DD.  Is this them trying to build their bank balance up rather than mine?  Reasonable or not with energy prices falling as we go through the year, hopefully?

@caro69 Have you found this on your online account:



You should be able to see how they are modelling your consumption over the year and you can see the effect of changing your DD, moves solid line up/down not sure if you can actually move it too far and actually pay that but I would find it and try so you can see what happens. The shift above is after paying £35 per month less than recommended

Principally your DD should be = {[(annual consumption*rate) + (standing charge *365)] + vat} /12

This needs to be applied for each fuel as shown in green and blue hatched, where you can see the expected increase for winter heating on gas. 

It seems Octopus in this instance are aiming for £100 at the start and end of the cycle so that may be the intent to recover back to £100 credit.

caro69

Spoonie_Turtle said:

caro69 said:

And before I leave this thread . . . think on this.  If you choose not to pay by direct debit you are penalised and pay more for your energy.  The energy companies want your money and they want it now.  They will penalise you if you decide to budget yourself.  All of the contributors above are advocating paying in advance for an essential service.  This goes totally against what MSE has been fighting for all these years isn't it?   

Not all of them, because you can pay by variable Direct Debit which gets you the DD discount but allows you to put money aside in summer, earning interest, that you can then use to pay the higher bills in winter.  Octopus is one of the suppliers that offers this payment method.

It's not actively recommended because people can struggle with not touching available funds, especially if things are tight and an unexpected expense that they can't otherwise afford pops up.  Some people cannot budget so tightly to afford extra outgoings in winter on the same income as summer.  So recommending it could be dangerous for the most financially vulnerable people (by which I mean those who find it difficult to make good decisions with money, rather than necessarily at any particular income level).  But it is an option that some people can make good use of.

If you make sure your balance with Octopus is pretty much always in credit - and you can make a £20 one-off payment to rectify yours right now - they tend to be pretty flexible with their DD amounts.

I understand it might not suit everyone and particularly those that do not find it easy to budget, but great information for those that can.  Thank you for pointing it out and good on Octopus giving this option.  I will certainly look into it.