Sainsbury's Energy hiking up my DD again

dunstonh

 have then calculated the cost of 12 months’ electricity at current rates:
 

Standing charge 41.671p for 365 days	£  152.10
Night rate 1221.8 kWh @ 12.56p	£  153.48
Day rate 4558.7 kWh @ 34.83p	£1587.80
Total for year	£1893.38

Why are you on Economy 7 with that ratio?   You typically need around 50% of your electric to be off peak for it to be viable (it has been as low as 30% in the past but not currently)

 This works out at a monthly payment of £157.78
I have therefore increased my direct debit to £160 per month.

Two issues with that.

1) you are in arrears.  So, you need to increase to catch up or alternatively pay a single amount to catch up

2) Winter 2023 was mild in most parts of the country and energy use was down by around 20%.   Their modelling wont be based on mild winters.  It will be closer to the median.

 Following my direct debit of £120 on 19/12/2023 my account will be £16.18 in deficit which seems to me to be a reasonable balance in the middle of December.

the coldest months are still to come.   You should have around 2 months credit in December (Assuming your monthly amount is accurate to begin with).

Since I joined Sainsbury’s Energy in October 2021 I have claimed refunds totalling £929.75 which just shows how your company is unreasonably calculating my direct debits. In addition to the refunds I also re-set my DD for three months during which I paid £1 per month!

Not sure why you are blaming them. They don't know what your annual use is until you build up around 3-4 years of history.    When you join them,  they ask what you think your annual use is and will price on that basis.     So, if its wrong, then the fault is yours.  Not theirs.

It sounds like you are unsuitable for the budget method of paying the bill.    You seem to go from over paying to under paying and not understanding that you need to build summer credit.      The month you should be at zero is May.     Not December.

Maybe you should switch to variable direct debit and pay each month based on your use that month.

matelodave

dunstonh said:

 are unsuitable for the budget method of paying the bill.    You seem to go from over paying to under paying and not understanding that you need to build summer credit.      The month you should be at zero is May.     Not December.

Maybe you should switch to variable direct debit and pay each month based on your use that month.

That's not strictly true if you are pretty accurate with your estimates and you are on target to balance out sometime in the summer.

My monthly DD is 1/12th (8.33%) of my annual consumption although  my actual consumption varies between around 4% .month in the summer rising to 10-15% month in the winter.

Therefore if I started a twelve month fix in October then I'd have an unhealthy looking debit come March which would get paid down to zero by the end of September however if it got started in April I'd have a healthy credit in October which would pay down to zero by the end of March.  August was around the optimum time to start a 12 month contract so you didn't go far in credit or debit.

Some energy companies would let you get away with it and it was only SSE who kept wanting to adjust it up and down quarterly based on the past quarters consumption which TBH just caused havoc.

dunstonh

That's not strictly true if you are pretty accurate with your estimates and you are on target to balance out sometime in the summer.

I agree that its fine if you know your usage and use May as the "zero balance" month.   The OP doesn't appear to understand their usage pattern though having swung from paying too much to too little and thinking that breakeven is where they should be in December.

I wouldn't be surprised to hear that back in 2021, they used monetary amounts to say what their usage was rather than unit counts. A method that should be banned as it so frequently leads to incorrectly monthly amounts.

JSHarris

FWIW I've never had an energy supplier that's been much good at estimating usage in order to set the DD amount.  The general trend with them all (in my experience) is to set a DD amount that's a bit higher than 1/12th of the usage.  This is probably sensible as long as the buffer they add isn't too high, given the volatility in prices over the past couple of years.

I have had suppliers try and impose ridiculous DD changes though.  UW wanted to almost double my DD last April, despite being in credit to the tune of a couple of hundred pounds, at the end of winter, right when I shouldn't have had any credit at all.  They backed off when challenged.  EDF did the opposite in September, the halved my DD because I was in credit, and that was way too big a cut just before winter so they've now had to increase it by about 50%, which is still not that accurate.

Given that suppliers seem to have access to historical usage going back some time (and ours hasn't changed much for a fair while now) I'm at a bit of a loss as to why they can't set DDs at a realistic level.  If I can do it with a simple spreadsheet that has the same data that they have, then it seems odd that they cannot do the same.

Scot_39

lilythepink2 said:

So I replied as follows:

Dear Sainsbury’s Energy

 I don’t know what method you use to calculate the expected payments from your customers but it is seriously defective. In fact I would go so far as to say that the email below is total rubbish.

 I have calculated (from our bills) the amount of electricity we used in the last 12 months from 8 October 2022. I have taken into account that we had a new smart meter installed in November 2022 and added the two sets of readings together.

 I have then calculated the cost of 12 months’ electricity at current rates:

 

Standing charge 41.671p for 365 days	£  152.10
Night rate 1221.8 kWh @ 12.56p	£  153.48
Day rate 4558.7 kWh @ 34.83p	£1587.80
Total for year	£1893.38

 This works out at a monthly payment of £157.78

I have therefore increased my direct debit to £160 per month.

 Following my direct debit of £120 on 19/12/2023 my account will be £16.18 in deficit which seems to me to be a reasonable balance in the middle of December.

Since I joined Sainsbury’s Energy in October 2021 I have claimed refunds totalling £929.75 which just shows how your company is unreasonably calculating my direct debits. In addition to the refunds I also re-set my DD for three months during which I paid £1 per month!

 I will be keeping a very close eye on the advice offered by Money Saving Expert and will be transferring my account as soon as a good deal with another company is available.

I would say there is nothing healthy about a debit balance in Dec for many on e7 - with three of typically the coldest months still to come when usage could be double or more monthly annualised DD level for many.

And will see account further in debt for those with electric heating especially negative by spring.

But given that annual mix not sure that's you - but Supplier maybe expecting it is for all e7 customers.

And as others - your off peak usage at c21% of total is really too low for e7.

Looks like you have been paying c30p average at those rates - check your regional price - but current Oct SR rate average c27.3p according to Ofgem.  Almost 10% lower - so c£170 pa.

Edit - when EOn Next (who are actually the back house supplier for Sainsbury's Energy) redid my DD at Apr anniversary - they reduced my DD to get within iirc c£5 balance on forecast costs by following Apr - using up all of my £300 credit.  They dropped that DD again in Jul - actually to below summer usages true costs - to keep that on track.

BikingBud

dunstonh said:

That's not strictly true if you are pretty accurate with your estimates and you are on target to balance out sometime in the summer.

I agree that its fine if you know your usage and use May as the "zero balance" month.   The OP doesn't appear to understand their usage pattern though having swung from paying too much to too little and thinking that breakeven is where they should be in December.

I wouldn't be surprised to hear that back in 2021, they used monetary amounts to say what their usage was rather than unit counts. A method that should be banned as it so frequently leads to incorrectly monthly amounts.

Why May? Why any month?

If you are using 2400kWh annually then as long your payment covers 200kWh per month then the area under the curve is the same. It doesn't really matter if it leads or lags the consumption is still covered by the payment and everybody should be happy.

The fact that energy company always want to see you always in credit as that de-risks their debt levels is by the by.

As long as you pay 1/12 of your consumption every month it works which ever month the zero month occurs.

ETA
On octopus, compare my usage page, they provide stats for usage in kWh and billed in £ a more appropriate means would be showing what % or your planned annual consumption has been used and if the forecast for zero occurs in the same month going forward. If too soon then you are underpaying if going away from you you are likely overpaying. But some of that requires people to understand maths which we all know is not fashionable.

dunstonh

Why May? Why any month?

late April/early May is the month that you stop using money banked from the previous Summer and start to build Summer credit again.  It is effectively the breakeven month.

If you are using 2400kWh annually then as long your payment covers 200kWh per month then the area under the curve is the same. It doesn't really matter if it leads or lags the consumption is still covered by the payment and everybody should be happy.

It does matter if it lags because you go into arrears over the winter. 

BikingBud

dunstonh said:

Why May? Why any month?

late April/early May is the month that you stop using money banked from the previous Summer and start to build Summer credit again.  It is effectively the breakeven month.

If you are using 2400kWh annually then as long your payment covers 200kWh per month then the area under the curve is the same. It doesn't really matter if it leads or lags the consumption is still covered by the payment and everybody should be happy.

It does matter if it lags because you go into arrears over the winter. 

So what?

If somebody could actually explain why it matters that would be great!

A cosine curve is after all only a sin curve that lags.

BikingBud

Scot_39 said:

BikingBud said:

Why May? Why any month?


The fact that energy company always want to see you always in credit as that de-risks their debt levels is by the by.

As long as you pay 1/12 of your consumption every month it works which ever month the zero month occurs.

That zero every month doesn't work when the bill in question includes winter heating though - and so usage is not flat.

My winter electric bills are often 2.5 times, sometimes over 3 if get prolonged really cold spells - summer low bill levels - as I am all electric - as are many but not all on E7 - as winter months include heating bills.

So for normalising around say a £100 DD - summer use might be £50-60 - winter use maybe £150-£200 in coldest months.

The regulator guidance / licensing terms - and the explicit profit cap allowance in the Ofgem cap for SVT tariffs - 2.4% on EBIT - both actively discourage supply companies from allowing balances to go into any significant debt.

Some suppliers are even shortening the time between standard credit billing - from 3/6m to monthly in one case - to reduce risk and debt costs.  (Which should hopefully then reflect lower cap rate differences in if widely adopted)

Is winter heating included in your 12 monthly consumption? If not why not? If so then splitting that over 12 months covers the cost and this concept of month zero is as appears to be your second discussion point primarily to minimise exposure for the power companies at the expense of consumers who might find other things to do with the many hundred of pounds that are being corralled.

So we've gone from quarterly in arrears to power companies now hedging our cash, all approved and encouraged by the "regulator".  Whereas we could be stoozing that and making it work for us!

As consumers and MSEr's we should be pressing for the concept of allowing areas a long as full payment is received.

badmemory

BikingBud said:

A cosine curve is after all only a sin curve that lags.

Be fair - most people have long forgotten what a sine or cosine are let alone a cosine curve.