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

deano2099

MWT said:

Mstty said:

MWT said:

deano2099 said:

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)

It does as long as they don't spend the refund they would get from their previous supplier when they move accounts...

What about people that start their energy lives (1st property) in October no previous supplier first home. It does happen not everyone starts their energy account life in the summer.

Of course, everyone has to start somewhere, but the basis of this shouldn't be an expectation that they can borrow money from their energy supplier to cover the bills...

But then why should the basis be an expectation that suppliers borrow money from their customers?

I mean, I sort of agree that no-one should be owing money to anyone but I don't see that, if we are going down that route, that one is more desirable than the other.

Especially given that statistically the suppliers have a worse track record than customers. (More customers were owed money by failing suppliers than customers have defaulted on energy charges in the past five years).

deano2099

I feel like if this the route energy companies want to go down, they should only offer fixed direct debits that start in March. It's an easy fix. Sign up any other time then you do variable direct debit or pay on receipt of bill. 

If they're not actually going to let customers split their annual payment up into twelve equal chunks unless they start in March, that should do that outright. 

Gerry1

Mstty said:

MWT said:

Mstty said:

MWT said:

deano2099 said:

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)

It does as long as they don't spend the refund they would get from their previous supplier when they move accounts...

What about people that start their energy lives (1st property) in October no previous supplier first home. It does happen not everyone starts their energy account life in the summer.

Of course, everyone has to start somewhere, but the basis of this shouldn't be an expectation that they can borrow money from their energy supplier to cover the bills...

In fact everyone is in debit for their first ever month of energy bills on DD.

Nope.  Avro took the first DD before the supply started.

https://forums.moneysavingexpert.com/discussion/6083034/avro-energy-first-direct-debit-timing

Mstty

Gerry1 said:

Mstty said:

MWT said:

Mstty said:

MWT said:

deano2099 said:

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)

It does as long as they don't spend the refund they would get from their previous supplier when they move accounts...

What about people that start their energy lives (1st property) in October no previous supplier first home. It does happen not everyone starts their energy account life in the summer.

Of course, everyone has to start somewhere, but the basis of this shouldn't be an expectation that they can borrow money from their energy supplier to cover the bills...

In fact everyone is in debit for their first ever month of energy bills on DD.

Nope.  Avro took the first DD before the supply started.

https://forums.moneysavingexpert.com/discussion/6083034/avro-energy-first-direct-debit-timing

Are they a current energy supplier still trading? If not that's of no use.

Chrysalis

At the very least I think Ofgem need to make VADD a mandated supported payment across all suppliers.  If they want people to get close as possible to a zero balance, its odd that suppliers are allowed to not support this payment method.

I think over time we might see FDD get tightened up with smaller deviations allowed from a zero balance as it is at least started to be recognised large credit balances and large debit balances are not healthy.

MWT

deano2099 said:

But then why should the basis be an expectation that suppliers borrow money from their customers?

I mean, I sort of agree that no-one should be owing money to anyone but I don't see that, if we are going down that route, that one is more desirable than the other.

The customers get to use the energy that the supplier has already paid for, so there is equity in keeping the account in credit, but as I've mentioned a couple of times now there is a spectrum of options for the customers, from suppliers like Octopus that only need the account in credit, to those that want a full month in advance and of course the option to just pay in arrears on receipt of bill (... at the cost of increased prices).

Should be something there to suit everyone...

BikingBud

MWT said:

Nelliegrace said:

If energy companies insist on having accounts in credit all year they should pay the going rate of interest on the money. They are taking advantage of customers by expecting us to pay large sums in advance for the convenience of levelling the payments. It is something new and adds up to a lot of extra profit for the company. 

We could go back to having a bill and paying it on the last day that it is due, and putting the regular amount into savings so we earn the interest. We used to do that when interest rates were last quite good, and we earned a useful amount on our household bills account. 
Now we have a bank account which earns interest and gives cashback on energy bills.

Payment on receipt of bill is still an option, you'll just pay more for your energy if you want to do it that way.

You don't get any interest on your balance with the majority of the suppliers, but you do get a lower price...

Also keep in mind that some do not require you to maintain a high credit balance, just that you remain in credit.

My Octopus account is typically no more than £10-20 in credit after my bill is paid each month, and my DD goes into the account a few days before the bill is due to be paid... not much interest to be made on that level of balance...

Always used to get bills quarterly and in arrears so monthly bills is definitely focussed on getting money from the customers. Especially as unlike quarterly billing so many will be paying against an estimate. 

Chrysalis

Whoever stated the FDD system it certainly was clever.

They managed to sell to customers that paying in advance for their energy is better for them vs 3 months in arrears.  Sold under the cover of "we will let some of you borrow from us".  I think in addition those quarterly bills allowed 28 days to pay or something like that, so effectively could pay 4 months after usage.

I think because so many seem to prefer this way of paying now, it wont go away any time soon, but if there is a slow momentum towards VADD and a tightening up of max deviation it is at least an improvement.

matt_drummer

Paying three months in arrears is ok when the energy retailers can set their own prices.

Once their profits are capped at less than 2% paying three months in arrears is a ridiculous concept.

Many people think that because energy costs are more than they have ever been it gives them the right to behave like a customer at a multi Michelin starred restaurant.

These companies make very little, £50 a year on an `average' bill and now we want to pay three months in arrears with 28 days to pay.

Really?

MWT

BikingBud said:

Especially as unlike quarterly billing so many will be paying against an estimate. 

That is entirely in the hands of the customers...

Can supply a manual reading whenever they want with most suppliers, or just install a smart meter, the vast majority of which will work just fine to deliver accurate meter readings.