Sainsbury's Energy hiking up my DD again

QrizB

BikingBud said:

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!

Because Sainsbury's Energy T&C say:

4.3.3 You should keep your account in credit and we’ll track and carry the balance forward to the next month’s Statement of Account;

The OP has agreed to keep their account in credit at all times. For a fixed monthly DD, this will typically mean a minimum account balance in the early spring.

By allowing their account to get into debit, the OP in in breach of their T&C.

BikingBud

QrizB said:

BikingBud said:

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!

Because Sainsbury's Energy T&C say:

4.3.3 You should keep your account in credit and we’ll track and carry the balance forward to the next month’s Statement of Account;

The OP has agreed to keep their account in credit at all times. For a fixed monthly DD, this will typically mean a minimum account balance in the early spring.

By allowing their account to get into debit, the OP in in breach of their T&C.

But you haven't explained why it matters! Just because..... it's our game and our rules so play nicely and don't upset the others

The OP has agreed that they "should" keep their account in credit not that they must!


The Ts&Cs also say:

• 4.3.4 We usually set your Direct Debit amount based on the amount of energy we think you’ll use over the year divided by twelve unless you pay by variable Direct Debit; 

and we know that's not happening!

It also says:

• 4.3.10 We normally ask for payment one month in advance but based on your credit history, which we get from a credit reference agency, we may need you to pay a security deposit. 

So optional elements within those but fundamentally they are getting prepaid and potentially overpaid so where is the risk of a good customer suddenly stopping. I would offer perhaps significantly smaller than the risks that we have recently seen materialise where the suppliers could not honour their contracts and funnily enough disappeared with consumer's money.

But as we know the rules are set by the corporations and often not for the benefit of the consumer.

Scot_39

If the usage curve is equal every month - the start point doesn't matter.

But your often not offsetting a flat line - where the utiltity DD is covering winter heating - true for majority of home users I suspect (unless have other high demand systems - like high mileage EV charging all year round).

I am a fairly low energy user by comparison with neighbours - I am sub the Ofgem 3900 kWh all electric cap - neighbours either side are well over it.

But even my winter bills can be 2.5->3+ times my summer bill levels depending on severity / duration of cold snaps. An elderly couple next door went over 4 regularly - c5x in worst cases - around £200 vs £40 few year back (must have been they moved out early 2022).

Bill scenario  - normalised to £100pm DD / rounded from past actual use - pre big cap rate hikes/EPG etc – to - so it's not a completely stupid example - if anything winter months for some with traditional electric heating will be relatively higher.  gas ?

Usage costs                                                   
    Jan     Feb    Mar    Apr    May    Jun    Jul    Aug    Sep    Oct    Nov    Dec                                                     
    160    145    135     80      70      60      70     70      70      70      110    160    = 1200 total
                                                                                              Annualised DD         100

Raw monthly debit credit vs 100pm DD

    -60     -45      -35     20      30      40      30     30      30     30       -10     -60

Impact on accumulated account balance                                                   
Start in Jan                                                                                                       Average Balance
Debit / Credit   

     -60  -105    -140   -120   -90     -50    -20    10       40      70      60      0             -33.75

Start in May

      60    15      -20      0       30      70     100    130    160    190    180    120         86.25
Start in Nov

   -130    -175    -210  -190 -160   -120   -90     -60     -30     0      -10      -70        -103.75

And remember £100 pm / £1200 pa - is half last winters EPG cap - and still c 2/3rds of current.  So in many cases the accumulated average debt could be higher.

No company with millions of customers is going to want to carry £100+ unnecessary debt per customer - certainly not at current vs past emergency interest rates.  And Ofgem doesn't want them to either.

At sub £1900 DF TDCV cap - the newly increased EBIT allowance is only c£40-45 (it's regional too). Even at base rate - if firms could borrow that low - £100 average - £5+ wipes out >10% of that allowance right away.

And thats not including bad debt debt levels - that are already so bad - that Ofgem is now proposing charging us all £16 from April next year - to help to cover cost of those and keep remaining sellers in business in UK.

PS My last annual review was April - and my DD adjusted to zero balance over following 12 months - by following Apr - although EOn also dropped my DD again in Jul.

I was switched from EOn to EOn next in a previous April - but may be more t do with Ofgem cap updates these days.  EOn of old when was on 6m billing cycles - normally did with June bill / statement iirc. 

BikingBud

Where you start counting from is just an accounting fix to suit them, you pay @1200 per year you pay all of your bills. Why should my money be in their pocket rather than mine? An average balance of £-35 seems fine to me.

Bad debts, especially for basics such as power and water, need to be managed in a different manner as a society. The provision of those services should not be run to generate profit at the expense of provision to all.

No doubt it will be claimed I don't understand the big boys games but yep them's the rules now go along and play nicely now.

Scot_39

Suppliers are regulated by Ofgem - essentially controlled by govt - to take on the role.

If you don't like the way its done - write to your MP.

We have all had to pay an extra £60 iirc last year - and still non zero SoLR cost for past failures.

£35 in the bank would earn you £1.75 over a year at 5%.

You would need £1200 in the bank at 5% for a year to recover the SoLR cost in interest - if the 5% rates last.

So ill happily lend them my £70-100 - to avoid another repeat of the £60 costs - caused by past failures.

And that probably doesnt include the full costs of the last big failure - Bulb which had to be taken under govt control (special administration) until iirc Octopus took on the c1.5m customers.

dunstonh

BikingBud said:

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.

Your assumption is that arrears are allowed or normal.       The curve should not fall below zero on the y axis as the T&C of most suppliers requires that.    You may not like the T&C, but that is what you sign up for.

With energy, most people will find that their lowest point is late April to early May (subject to weather patterns).   So, drawing excess in May is cleaner and makes it easier to comply with the T&C and less likely to find that the supplier asks or tells you that your monthly payment is going to increase to cover arrears.

BikingBud

dunstonh said:

BikingBud said:

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.

Your assumption is that arrears are allowed or normal.       

Can you point to where OFGEM consider it is inappropriate?

There is discussion about "Payment adequacy" checks and ensuring that significant credit does not accrue but I cannot see where debits are forbidden. 

From EON:

Payment review.
 
A payment review is also referred to as payment adequacy. This is when we review your monthly payment to check it’s right. If you’re consistently using more energy than your monthly payment covers, we may suggest that you change your Direct Debit amount to avoid building up a debt on your account.

and from Octopus:

We review all accounts several times a year to ensure you're not going too far into credit or debit. We'll get in touch if any adjustments need to be made.

So not really forbidden!

Scot_39 said:

Suppliers are regulated by Ofgem - essentially controlled by govt - to take on the role.

If you don't like the way its done - write to your MP.

We have all had to pay an extra £60 iirc last year - and still non zero SoLR cost for past failures.

£35 in the bank would earn you £1.75 over a year at 5%.

You would need £1200 in the bank at 5% for a year to recover the SoLR cost in interest - if the 5% rates last.

So ill happily lend them my £70-100 - to avoid another repeat of the £60 costs - caused by past failures.

And that probably doesnt include the full costs of the last big failure - Bulb which had to be taken under govt control (special administration) until iirc Octopus took on the c1.5m customers.

Perhaps that is because OFGEM were ineffective and let the cowboys run the circus hence:

https://www.ofgem.gov.uk/publications/ofgem-announces-tough-new-financial-measures-ensure-energy-suppliers-can-withstand-future-shocks-including-protection-customers-credit-balances

and 

https://www.ofgem.gov.uk/publications/direct-debit-market-compliance-review-progress-update

What was so wrong with paying quarterly in arrears? Where there more debts? More people being cut off because they couldn't afford to pay bills? More people on prepayment metres? Seems a number of people have run off with the not so petty cash and we are all left covering the debt.

Light touch regulation? That worked didn't it:

An investigation into supplier failures accused Ofgem of giving entrants a “free bet” — enabling them to join with minimal risk and to exit with almost no downside.

My money, in my bank and under my control all seems like a good plan to me. 

Like I said before: "No doubt it will be claimed I don't understand the big boys games but yep them's the rules now go along and play nicely now."

QrizB

Sorry, I was under the impression that this thread was helping the OP understand why Sainsbury's Energy wanted them to keep their account in credit.

It seems to have been derailed.

BikingBud

Scot_39 said:

If the usage curve is equal every month - the start point doesn't matter.

But your often not offsetting a flat line - where the utiltity DD is covering winter heating - true for majority of home users I suspect (unless have other high demand systems - like high mileage EV charging all year round).

I am a fairly low energy user by comparison with neighbours - I am sub the Ofgem 3900 kWh all electric cap - neighbours either side are well over it.

But even my winter bills can be 2.5->3+ times my summer bill levels depending on severity / duration of cold snaps. An elderly couple next door went over 4 regularly - c5x in worst cases - around £200 vs £40 few year back (must have been they moved out early 2022).

Bill scenario  - normalised to £100pm DD / rounded from past actual use - pre big cap rate hikes/EPG etc – to - so it's not a completely stupid example - if anything winter months for some with traditional electric heating will be relatively higher.  gas ?

Usage costs                                                   
    Jan     Feb    Mar    Apr    May    Jun    Jul    Aug    Sep    Oct    Nov    Dec                                                     
    160    145    135     80      70      60      70     70      70      70      110    160    = 1200 total
                                                                                              Annualised DD         100

Raw monthly debit credit vs 100pm DD 

    -60     -45      -35     20      30      40      30     30      30     30       -10     -60

Impact on accumulated account balance                                                   
Start in Jan                                                                                                       Average Balance
Debit / Credit   

     -60  -105    -140   -120   -90     -50    -20    10       40      70      60      0             -33.75

Start in May

      60    15      -20      0       30      70     100    130    160    190    180    120         86.25
Start in Nov

   -130    -175    -210  -190 -160   -120   -90     -60     -30     0      -10      -70        -103.75

What about the Day 1 payment of £100 so on your Raw Monthly Debt calculation you have +£100 and no consumption then at day 30 you add another £100 and take of £160 consumption giving you a net balance:
 +£40 you are always paying early;

Usage costs billed at end of month                                                    
    Jan     Feb    Mar    Apr    May    Jun    Jul    Aug    Sep    Oct    Nov    Dec                                                      
    160    145    135     80      70      60      70     70      70      70      110    160    = 1200 total
                                                                                              Annualised DD         100

Raw monthly debit credit vs 100pm DD (paid in advance)

• 1 Jan £100  = +£100
• 1 Feb £200 - £160 = +£40
• 1 Mar £140 - £145 = -£5
• 1 Apr £95 - £135 = -£40 (lowest point)

An overall gives an average balance of ~ +£71

Or you could dress it up many other ways to make it seem like the poor energy companies are hard done by