Scottish Power - Variable Direct Debit Possible?

dh9988

I admit I may be being stupid on this subject but does anyone know if it is possible to have a variable direct debit with Scottish Power? We are with them for gas and electricity and previously paid quarterly via cash, but moved to a direct debit when it would supposedly be cheaper.The problem we have now is that it seems the direct debit is a fixed amount, so for argument say it's set at £150. That is fine if our usage is billed at £140 (using simple figure as an example), as the account would be in credit. Not ideal, but fair enough. If we get billed for £160 usage, obviously the £150 would not be enough and would leave the account in debt by £10. At least that is how I understand it. After an excruciating session with Scottish Power's online agent, it appears if I understood them correctly, if the bill is consistently more than the direct debit amount, it will be automatically adjusted to account for this.

My question is, is there any way to change the direct debit from that kind of set up to a variable one i.e. we pay for exactly what we use and no more, no less or would we have to consider going to another supplier? Am I just being an idiot in misunderstanding how we are paying for our energy use from Scottish Power? Thank you in advance for your advice.

BarelySentientAI

dh9988 said:

The problem we have now is that it seems the direct debit is a fixed amount, so for argument say it's set at £150. That is fine if our usage is billed at £140 (using simple figure as an example), as the account would be in credit. Not ideal, but fair enough. If we get billed for £160 usage, obviously the £150 would not be enough and would leave the account in debt by £10. At least that is how I understand it. 

That's not a 'problem', that's how the vast majority of customers on direct debit for their electricity and gas do things.

Variable direct debit is possible with some suppliers (also called things like whole monthly direct debit and similar), but not with all of them and it isn't automatic, you have to tell them that's how you want it to be.

I don't know if SP are one that offers it.

Scot_39

Re current monthly annualised ("fixed") direct debit - yes that's exactly how it's meant to work. 

And yes the supplier should track you are on target and adjust up or down if not on target for actual use. That used to be once per year in old days - at account review - but seems far more frequent now - partly as on SVT and rates have been changing significantly.

The problem with your £150+/-£10 example is that it is too small a variation for most users when the bill covers space heating - and so fails to show its biggest benefit for those on say low or fixed incomes.

It is specifically designed to help smooth out winter heating bill peaks - when bills can easily be 3+ summer levels for many - and allow people to budget for and pay a fixed amount.

E.g. New cap forecast median tdcv £1714.  To get there, say your bills split over year as say 7x summer bills £80 - winter bill - 3 mild at x2.5 £200 rising to say coldest 2 months at x3.5  £280 - you might then pay annualised DD - £1720/12 = £143.  [Or at least if start cycle in April May]

Finding the additional £60-£140 for those peak winter months could / would be difficult for many millions of households  - those without much in way of savings, on low or fixed incomes etc.

Others can ride the variation or self budget so put money away in summer to cover winter etc (and in recent times earn a bit of interest). And some really don't like the idea of having a large credit - in £100s - at suppliers - say Oct/Nov time.


Re Monthly Variable direct Debit.

SP are not on the 2022 MSE article list.

And it's not in their list of payment methods.

https://www.scottishpower.co.uk/support-centre/payment-methods

Sadly it fails to make clear which Ofgem cap rate applies if on SVT to the less standard methods - e.g. quarterly bill but taken by DD.  If it gives you DD rates - it might be close enough.

But beware you are prepared for seasonal variations.

And then smart prepay might be even cheaper still - it's current ave cap £1522 vs DD £1568.

Or you could switch suppliers - possibly with a referral code - to one who does support MVDD (some use different names) and get £50 into the bargain.

dh9988

OK so my, or rather my parents since it is them that pays for the energy, basically have the options which are:

• Just keep a careful eye on their energy use and adjust the DD amount accordingly to avoid being too much in debt/credit.
• Move energy supplier.

My parents being old fashioned would've preferred being charged only for what they use, which is personally what I was expecting to be honest.

Thanks for the advice and clarification folks. Given there is some grumbling from my parents over the bills overall, this might be worth encouraging a move elsewhere that does allow variable DDs.

BarelySentientAI

dh9988 said:

My parents being old fashioned would've preferred being charged only for what they use, which is personally what I was expecting to be honest.

Then they could go onto a prepayment tariff.

bob2302

dh9988 said:

• Just keep a careful eye on their energy use and adjust the DD amount accordingly to avoid being too much in debt/credit.
• ...

My parents being old fashioned would've preferred being charged only for what they use, which is personally what I was expecting to be honest.

If you pay for what you use, most people end up paying large amounts for the coldest months and much less over the summer. The point of a fixed DD is that you pay a similar amount each month and build up credit  in summer to see you through the winter.

Ildhund

Just to add that the price-capped rates for payment on demand as opposed to by Direct Debit are quite a bit higher. You can compare the two (and for prepayment) at Ofgem's site: Get energy price cap standing charges and unit rates by region | Ofgem 

The standing charge alone is about £20 higher per year, while the unit rate is more than 5% higher. Add a forthcoming increase from 1 October of 9% and payment on demand may not seem worth the perceived advantage of only paying for what they've used. 

Scot_39

dh9988 said:

• Just keep a careful eye on their energy use and adjust the DD amount accordingly to avoid being too much in debit / credit

Most suppliers are quite restrictive on changes to the direct debit amount on their standard DD terms.

EOn used to allow increases but only about a 10% decrease if in clear credit - and that once per billing cycle.  

With many you probably couldn't track seasonal variation even if could be bothered attempting too.

MVDD is a suppliers choice to offer.  As is payment in arrears - even monthly - that it is based on.

Some suppliers had intermediate solutions - SO Energy had the interesting concept of seasonal billing - they split the annual plan into 6m summer rate and 6m winter rate.  Their description of plan shows a chart and the potential seasonal variation cost quite well (they use approx 2.5:1 winter summer ratio in their example chart).

SP as above had quarterly billing then amount taken by DD (at least on fixes - if parents on variable and would be interested and if SP offer - would check still at reduced DD rates).  But a 3m bill over winter could be for a lot of money at once.

Some suppliers even on DD plans take money in advance, including the above mentioned SO Energy -  first payments in their case. To help their cashflow.

They are all becoming less tolerant of debts / debt risk.  And Ofgem guidance is not to allow significant debts to accumulate.

Ildhund

Re seasonal variation: when OVO calculate their fixed monthly direct debits, they use a set of monthly weightings to illustrate how the balance would vary month by month over the year. These are the weightings I've been able to figure out for electricity:
  

 
[This means that the average household is expected to use 6.6% of annual consumption in June and 10.8% in December. The winter semester takes 58.3% - a long way from the 2.5:1 you quote for SO, unless it allows for gas heating in winter. I've no idea where OVO's figures come from.]

As regards 'payment in advance', that's one of OVO's core terms for DD customers, who agree to keep the energy account in credit by paying for the supply in advance. I'd be interested to hear whether this isn't the case for other suppliers. This is the principal reason why payment in arrears is generally more expensive.

Scot_39

Yes thinking that might be excluding heating.

Is that only electricity - I.e. includes hw and heating - or just electricity as part of gas.

It might be my bias as expensive cf gas electric heating here but my winter bills easily reach 2.5x summer - sometimes well over 3 if a really cold prolonged snap - and I consider myself a low temperature target home (as low as 16/17 max LR, 14/15 max elsewhere - when really pushed it).  


To me theefore 10.8 vs 6.6 and especially 58% vs 42% it seems likely hose figures exclude heating.

SO Energy give a chart example for their seasonal DD plan - I refered to their scheme above - but didnt show the link - it uses a 2.5:1 ratio winter peak to summer.  £71 vs £28.  Obviously old data I guess - maybe they no longer exist / offer  - but feel probably more realistic seasonal range for total bills.

https://so.energy/support/solutions/articles/7000046282-what-are-seasonal-payments-and-how-are-they-calculated-

Afaik mvdd works in arrears 

They get the reading
Produce the bill
Take the dd n days later for that amount.

Some on Octopus state they set a nominal - as low as £1 dd - and give monthly readings, wait for bill and clear (by card or online?) on some plans.

But like your provider others including the SO website also states they take the first payment in advance on their Dzd plans for cashflow - to buy the energy they sell you with it.