Is 8.1 Billion too much for energy firms to hold of customer money?

QrizB

Qyburn said:

I'm not convinced people really aren't able to budget for variable Summer/Winter payments. What about people using oil or LPG?

There are occasional posts on the "other fuels" forum from people who have only just realised they need to buy a tankful of fuel, but haven't budgeted for it. Some of those people think that their suppliers should offer a monthly budget DD scheme!

ArbitraryRandom

Qyburn said:

I'm not convinced people really aren't able to budget for variable Summer/Winter payments. What about people using oil or LPG? It's quite common to buy up to a year's supply at a time. Solid fuel as well, our neighbours a while back used to buy their year's supply of housecoal and anthracite in one order to get the best price. 

Who said people can't? 

But the difference for me between standard utilities and oil/gas would be when you are expecting to buy and how you buy - you buy a fixed volume in advance - so you have to think about how much you are going to use and it's a fixed/known price that you can budget for, plus any 'extra' you end up with is still there next year... which is more like a monthly DD where you're paying into an account for energy and if you don't use it all by the end of winter then the money is still there ready for when you do.  

I have a solid fuel stove as supplementary heating and I've got a full log store plus 10 sacks of coal purchased while it was 'cheap' in the summer that experience tells me will happily last the 3 months I tend to light the fire for - I find it very different from the idea of an unknown cost in the middle of winter when prices are higher and I have other things I need to be spending money on. That's more like the people who don't buy their coal/logs in advance and just go to the garage to buy a couple of sacks at whatever the price is when they run out. 

Qyburn

QrizB said:

There are occasional posts on the "other fuels" forum from people who have only just realised they need to buy a tankful of fuel, but haven't budgeted for it. Some of those people think that their suppliers should offer a monthly budget DD scheme!

Some oil suppliers do offer a budget scheme, but they tend to be the expensive suppliers, who you are then tied into. There's no benefit over paying a monthly sum into a savings account.

Netexporter

I bought my logs in July, to get the summer discount (and two free boxes of fire-lighters).

QrizB

Netexporter said:

I bought my logs in July, to get the summer discount (and two free boxes of fire-lighters).

This also gives them a few extra months to dry out, if needed.

Netexporter

This also gives them a few extra months to dry out, if needed.

No need with these. Kiln-dried to a guaranteed maximum of 15% moisture. The latest lot were so dry I couldn't get a reading on the moisture meter.

Grumpy_chap

Qyburn said:

Some oil suppliers do offer a budget scheme, but they tend to be the expensive suppliers, who you are then tied into. There's no benefit over paying a monthly sum into a savings account.

The thing is different people think in different ways and manage their money differently.
Paying a "premium" for monthly direct debit for oil supply is, surely, no different to paying a "premium" for monthly car insurance payments.

the_lunatic_is_in_my_head

Is anybody suggesting this method of payment shouldn't be available anyway? 

There's two issues, it benefits the supplier so hopefully steps are in place to prevent overcharging monthly at detriment to the customer, particularly for vulnerable customers.

Secondly nobody seems happy with the standing charges recently and part of that has been to cover credit balances from failed suppliers. With so much being held I wonder how people will feel if gets very bad and one of the bigger suppliers failed. 

Apparently if we don't build up credit the suppliers will be in debt or we'll have higher charges but @QrizB or @[Deleted User] didn't answer the question regarding how suppliers pay for their energy in advance, so I guess we'll never know. 

Qyburn

QrizB said:

Netexporter said:

I bought my logs in July, to get the summer discount (and two free boxes of fire-lighters).

This also gives them a few extra months to dry out, if needed.

Bought in stuff should be ready to burn, isn't that a legal requirement nowadays? I still prefer to give mine a few Summer months as well. From green I give it two Summers.

ArbitraryRandom

the_lunatic_is_in_my_head said:

Is anybody suggesting this method of payment shouldn't be available anyway? 


Apparently if we don't build up credit the suppliers will be in debt or we'll have higher charges but @QrizB or @[Deleted User] didn't answer the question regarding how suppliers pay for their energy in advance, so I guess we'll never know. 

Yes, a few people on this thread (and others) have suggested that suppliers should not be able to hold balances and that the default should be variable DD or pre-pay - that was what led to the discussion around if such an idea was sensible/would be preferred by the majority of customers. 

I'm not either of the posters you mention, but suppliers use customer balances as revenue - so use them to fund purchasing energy futures. Hence the suggestion that if they were not permitted to use the funds this way (because the funds were ring-fenced or customers could not annualise their payments) then suppliers would need to either pay the spot price or borrow the funds - both of which would lead to an increase in costs (either the interest on the loan or the rate paid).