Octopus direct debit guarantee.

pseudodox

As an energy consumer who pays by MVDD because I am perfectly capable of budgeting for low summer/higher winter bills (as are many on this forum) I know that I am getting short term credit.  But when I pay the slate is wiped clean & the supplier gets to keep every penny from me.  They will not have any further costs in accounting for potential long term debt or administration of refunds & lengthy arguments about who owes what to whom.

If my supplier goes bump they are not holding credit from me that has to be recouped by loading it onto other consumers in a standing charge elements.

This is MSE.  One of it's aims is to encourage us to save money.  I save for my energy bills in an account that pays me interest.  Perhaps ML should encourage the energy suppliers to save money by changing to a system that means they don't have to employ hordes of CS staff to sort out gripes from customers over perceived "unfair" DD levels, inaccurate bills, process refunds & compensation for poor service etc etc.

These days with living costs always rising it makes sense to pay bills monthly instead of the historic quarterly system.  But with smart meters & online banking why not weekly payments?  Split off the standing charge to an annual bill, payable in a lump or installments like Council Tax, with this bill being perhaps subject to benefits for low income households.  Then actual consumption of energy billed as used - with consumers offered various tariffs/conditions in a competitive market.

TheBanker

pseudodox said:

As an energy consumer who pays by MVDD because I am perfectly capable of budgeting for low summer/higher winter bills (as are many on this forum) I know that I am getting short term credit.  But when I pay the slate is wiped clean & the supplier gets to keep every penny from me.  They will not have any further costs in accounting for potential long term debt or administration of refunds & lengthy arguments about who owes what to whom.

If my supplier goes bump they are not holding credit from me that has to be recouped by loading it onto other consumers in a standing charge elements.

This is MSE.  One of it's aims is to encourage us to save money.  I save for my energy bills in an account that pays me interest.  Perhaps ML should encourage the energy suppliers to save money by changing to a system that means they don't have to employ hordes of CS staff to sort out gripes from customers over perceived "unfair" DD levels, inaccurate bills, process refunds & compensation for poor service etc etc.

These days with living costs always rising it makes sense to pay bills monthly instead of the historic quarterly system.  But with smart meters & online banking why not weekly payments?  Split off the standing charge to an annual bill, payable in a lump or installments like Council Tax, with this bill being perhaps subject to benefits for low income households.  Then actual consumption of energy billed as used - with consumers offered various tariffs/conditions in a competitive market.

The problem with that is that a lot of people aren't capable of budgeting in that way, and it is therefore easier and 'safer' to pay the same amount each month, building up credit in the summer to cover the higher bills in winter. Those who want to manage their own budgeting can already do so, using variable direct debits/pay on receipt of bill or even pre-payment meters. 

People on MSE are probably better than average at planning budgets - but I think your proposal would cause significant unintended problems if it became the 'default'.

What would help, though, is a better understanding amongst the public about how energy bills work. My mate's lad moved into his first flat last year and had no idea. So he asked his dad who just knew he paid a certain amount each month, and every now and again receives an email saying he needed to pay a bit more...

Even things like having to submit regular readings (unless on a smart meter) seems a mystery to some people!

born_again

pseudodox said:

As an energy consumer who pays by MVDD because I am perfectly capable of budgeting for low summer/higher winter bills (as are many on this forum) I know that I am getting short term credit.  But when I pay the slate is wiped clean & the supplier gets to keep every penny from me.  They will not have any further costs in accounting for potential long term debt or administration of refunds & lengthy arguments about who owes what to whom.

If my supplier goes bump they are not holding credit from me that has to be recouped by loading it onto other consumers in a standing charge elements.

This is MSE.  One of it's aims is to encourage us to save money.  I save for my energy bills in an account that pays me interest.  Perhaps ML should encourage the energy suppliers to save money by changing to a system that means they don't have to employ hordes of CS staff to sort out gripes from customers over perceived "unfair" DD levels, inaccurate bills, process refunds & compensation for poor service etc etc.

These days with living costs always rising it makes sense to pay bills monthly instead of the historic quarterly system.  But with smart meters & online banking why not weekly payments?  Split off the standing charge to an annual bill, payable in a lump or installments like Council Tax, with this bill being perhaps subject to benefits for low income households.  Then actual consumption of energy billed as used - with consumers offered various tariffs/conditions in a competitive market.

Sadly they will need the same level of staff. As well are you expecting ML to tell companies to sack people.... 🤦‍♀️He is not well looked on by many people now, that would be like lighting the blue touch paper.

We all used to pay in arrears years ago. Then (pretty sure) OFGEM advised that a monthly DD was a more suitable method as it smoothed out the troughs & peaks of billing. 
Given the vast number who can not budget. You only have to look at the number who are in debt to energy co's to work that out.

pseudodox

Everyone should have the choice between MVDD & FDD & any other method of payment that suits them.  Stop pushing everyone into the same mould.  But it should be made very clear how each of these methods work & people should be helped to judge their own ability to manage their finances through education.  People cannot budget because with lack of guidance & availability of easy credit they have never learnt to manage their finances or even these days their own lives.

How many posts have there been on here from people who think FDD is an"all you can eat" tariff.  And with the numbers on such forums being a small percentage of consumers how many more are getting into financial difficulties because they have not had clear explanations?

BarelySentientAI

pseudodox said:

Everyone should have the choice between MVDD & FDD & any other method of payment that suits them.  

Or to translate this:

All suppliers should be forced to operate as many parallel billing systems as possible because someone might want to do things in a different way.

That doesn't sound cheap.

After all, there have been people on here recently saying that they wanted to go into a physical shop branded with the name of their supplier to pay over the counter.  Should we enforce that option too?

TheBanker

BarelySentientAI said:

pseudodox said:

Everyone should have the choice between MVDD & FDD & any other method of payment that suits them.  

Or to translate this:

All suppliers should be forced to operate as many parallel billing systems as possible because someone might want to do things in a different way.

That doesn't sound cheap.

After all, there have been people on here recently saying that they wanted to go into a physical shop branded with the name of their supplier to pay over the counter.  Should we enforce that option too?

In a market with competition, I think suppliers can already offer different payment methods. Octopus certainly offer a range of options. But the supplier should also be free to adjust pricing to reflect that some options cost them more to administer or have a higher risk of customer defaults than others. And the supplier should have the ability to move a non-payer onto a pre-pay tariff more easily than they can at the moment.

Energy companies are different to most businesses in that they can't simply stop supplying customers, even those who run up debts. So there needs to be certain rules in place to protect everyone else, who eventually ends up covering those debts.

Perhaps the simplist thing would be to put everyone a Pay As You Go tariff with a credit limit. Once you reach your limit, no more energy is supplied until you've made a payment. 

Qyburn

Given the issues that some have with fixed DD it should really be a requirement for suppliers to review actual use vs budget at reasonable intervals. I think at the moment it only needs to be once a year, that's plenty of time for things to go well astray. 

Ildhund

Qyburn said:

... it should really be a requirement for suppliers to review actual use vs budget at reasonable intervals. 

Shall we do a poll? I'll go first:
OVO: Direct Debit review every three months.

born_again

Why would they need to review your DD every 3 months? so long as your usage is in line with historic usage, OK some people will not have a history with the supplier, but they should be able to get that from previous supplier.

Given I have a nice healthy credit balance at the moment. I could reduce it. but in doing so it would only gain me a few pence interest.
Personally rather have the healthy credit knowing that come winter I have enough to cover the winter peak. As I am not in a position to cut usage in winter any further due to personal circumstances.

But fully understand why some simply want to pay for just what they use each month.

Ildhund

born_again said:

Why would they need to review your DD every 3 months? 

To check whether the usage pattern has deviated from that expected. There are all sorts of things that could radically alter the usage pattern, but unless someone looks, it might go unnoticed and leave you with a DD that's far too high or too low: install a roof-full of solar panels, a heat pump or a wood burner, acquire an EV, take a profligate live-in lover ...