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

SAC2334

caro69 said:

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.

You were lucky to be moved to Octopus and if you were savvy back in Jan and Feb you would have grabbed   Octopus Tracker with both hands and for the last 4 /5 months you would have been paying half price for you gas , 5 p kwh instead of 10 p kwh and around 19 p /kwh for electric . Todays daily Tracker is only 3.7 p /kwh and electric is 17 p /kwh .

My supplier Zog Energy also went bust and was very popular on here where we we paying around 3.4 p /kwh . Well todays Tracker is not far off the good old days of Zog Energy s pre bust rate at 3.7 p /kwh 

Octopus are a breath of fresh air compared to the old school bunch of losers such as BG, EDF, Scot Power and Eon , so I dont mind building up my credit by October to around £600 for which I m losing the sum of £1 or £2 a month in ( dependent on if you pay tax on interest )interest  and thats at todays leading easy access savings rates  with Chip at 3.7 % 

MWT

Gerry1 said:

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.

No question that some did abuse the system, but it would be wrong to treat all suppliers as though they had done that.

It is not a Ponzi scheme to use customer advance payments to cover supplier advance costs for energy hedging...

The 'Ponzi' element was when a small number of suppliers were not hedging their energy requirements and were trying to attract new customers with below cost pricing...

Chrysalis

My personal opinion is that a reasonable balance is anywhere from £0 to one bill's worth of balance.

If you unhappy with the current billing system, as others have suggested switch over to variable direct debit, you will pay for the bill amount, no more no less.

OrbitHeadache

This whole build credit over summer thing that Energy companies seem to insist on seems outdated.

For the last 12-18 months I have been in credit or debit at most about £10 either way.

Just pay what you use based on smart meter readings.

That's it job done 

BUFF

Iirc the govt/Ofgem last year tightened up on the energy suppliers, partly so that excessive credit balances could not build up but also I believe that people should equally not be able to go into debt by any substantial amount.

Mstty

OrbitHeadache said:

This whole build credit over summer thing that Energy companies seem to insist on seems outdated.

For the last 12-18 months I have been in credit or debit at most about £10 either way.

Just pay what you use based on smart meter readings.

That's it job done 

And that is all fine for people that manage their finances well and understand the greater energy use in the winter.

Direct debits smooth out the highs and lows for an easier budget for many and many people love it for this reason.

Those here that are money savvy, know their historical energy use and can budget and shift money about to make the very most out of every pound then yes variable DD with the discounted rates and pay for what you use is the best option

Sea_Shell

Historically, we always seemed to come off a fix (and start a new one) in October, just as we were heading into Winter.

They'd set the DD (based on accurate annual usage) and off we'd go.    There was never any mention of adjusting the DD come spring, when we were in debt on the account, because that would get paid off over the summer months, and by the following October we'd be back level.   The whole point of a fixed DD.

It does seem that recently, energy companies have changed tack with no longer allowing debit balances to accumulate, even if your initial DD and usage were all accurately calculated at the start of your contract.

It seems like a move towards pay-as-you-go 'in full' DD's is the way things are heading.    Which may not be a bad thing TBH.   As long as the customer can budget for winter themselves.    Many can't, through a lack of funds or of understanding. 

[Deleted User]

I have been an Octopus customer for nearly 5 years. Some years ago, I had a discussion with CS about account management. It was agreed at that time that provided my energy account was always in credit, I could change my monthly DD payment at will. Octopus continues to make DD recommendations which I ignore. My present monthly DD is set at £10 per month as export credits more than cover my monthly bill. Come Winter, I will increase the payment month by month to cover my expected energy cost.

As others have said, this requires the consumer to monitor energy usage very closely, and to be able to resist the temptation to spend money saved for future energy costs.

deano2099

km1500 said:

I always thought the idea was to gradually build up credit over the summer months which will then be slowly run down over the winter months IE you were never actually in debit

Which is fine, if you open your account, move home or switch in April. It fundamentally creates a problem if you move in September.
The idea is to work our your likely annual spend and divide that by twelve and charge you that every month. You should be at exactly £0 on every one-year anniversary of your account opening.
Bizarrely, Ofgem seem more interested in telling energy firms to avoid customers building up "too much*" debt on their accounts rather than telling them to avoid getting into debt with their customers - especially as we've all had to pay to cover those debts when those companies went bump.

*(What I suspect has happened is that the Ofgem guidance around what amount of consumer debt is too high hasn't changed with changing energy prices - it's probably a fixed figure, and with increasing prices the actual reasonable "debt" figure someone on a Sept-Sept DD cycle might run up has ended up above what they consider okay)

deano2099

dunstonh said:

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.

It doesn't help people budget if they open an account in November, get hit with a really high direct debit for the winter months (as it has to cover actual usage under your system) and then have that halved in March.
(Or more likely, not halved unless the customer requests it, and then end up £1000s in credit)