E.On say my DD needs to change to help me stay free from debt

OldGuy1943

My account is in credit after the summer. E.On recommended an account balance of  £455.71.

 E.On say ' Any difference between your actual balance compared to your recommended balance will be factored into a new Direct Debit amount following on from a payment review. This would either be an increase to your predicted usage alone or a decrease to help your account stay on track and will help you achieve your recommended balance over a 12 month period.

What does this mean for me?

Your current balance is £384.72 credit.

Your recommended balance is £455.71.

The difference: -£70.99.

This means we’ll divide the difference by 12 and will adjust your monthly payment by +£5.91.'

This is forward accounting and means that E.On gain interest on a capital sum £384.72 to  £455.71.

I don't need E.On to keep me free from debt, while making interest on extra money they charge me .
The obvious solution is to reclaim the credit in my account or reduce my DD. The reclaim of credit is no longer an option on the E.On website and DD can only be changed by !0%.

Is the solution to change supplier?

Brie

Ask if they can switch you to a flexible DD rather than a fixed one.  That way you'll only pay for what you are using, not what they imagine you will use over the next few years.  

This would mean that you're monthly DD would change and be quite high in the winter and low in the summer but if you're ok with your budgeting this may not be an issue for you.  

fyi - I was with Eon until last spring when I switched elsewhere to a lower fixed tariff.  Prior to that they had confirmed to me that they allow flexible DDs.  

JohnSwift10

I am on a variable DD with Eon and my bills for last year varied between £92.14 at its lowest and £228.37 at its highest.

I expect my highest bill this winter to be about £250, maybe more.

If you can budget for more than double payments in winter than in summer go for it.

If you prefer to know what you will be paying every month stick to fixed direct debits.

And as for interest, it is pennies.not worth bothering about.

Reed_Richards

In a normal annual cycle, your account will be in credit at the end of the summer and in debit at the end of the winter.  Eon can make a few pennies in interest whilst your account is in credit and you can make a few pennies of interest whilst your account is in debit.  Swings and roundabouts, surely?  

HillStreetBlues

Reed_Richards said:

In a normal annual cycle, your account will be in credit at the end of the summer and in debit at the end of the winter.  Eon can make a few pennies in interest whilst your account is in credit and you can make a few pennies of interest whilst your account is in debit.  Swings and roundabouts, surely?  

If it's anything like Octopus with their recommended payments they never want you to be in debt only in credit

elsien

Parent had the opposite problem with Eon.

They were trying to reduce her direct debit because she was in credit, but this was at the height of the summer and it would not have been enough credit to cover the winter usage so she wanted to keep it as it was. 

Not an easy process. 

MattMattMattUK

The difficulty for suppliers is that they have to follows guidance which says that the customer should not get into debt at any point in the year, hence the need to build up a credit, but also that the credit should not be "excessive", but with no definition of what that is. Some customers choose to get annoyed when they see a credit building up over summer, demand it is repaid, which the supplier does, then choose to become irate when their Direct Debit goes up to account for higher winter usage and the requirement to keep the customer out of debt. 

Scot_39

According to Ofgem latest quarterly update - on CCBs (CCB = Customer Credit Balance) - released few weeks ago - Sep 24 -  average customer credit balances are falling - by about 12% since similar spring quarter last year - to £202 from Apr to Jun 2024.

I think thats a filtered measure - so hopefully just those still on annualised DD only - I just scanned the quarterly summary - 1 a4 web page - not any background reports.

But at £202 - still positive when arguably should maybe be closer to zero.

And others might argue something like as -VE in spring coming out of winter heating as are as +VE in autumn going into it - if you like zero average balance rather than zero minimum would be much fairer - but Ofgem are if anything pretty anti debt.

And for those in favour of MVDD and so running accounts monthly plus in arrears - many standard credit customers - at at least at one supplier - EDF iirc - are being moved to monthly - so share a pretty similar arrears profile - but pay the current £112 at cap levels for the "privelege".

And arguably MVDD should carry a share of the same arreas cost - if not the postage factor.

But in the last Ofgem ring fencing of CCB discussions - proposing new tests from Mar 2025 iirc - Ofgem stated it was "not in cutomer's interest" to fully ring fence CCBs - so stopping financially healthy companies at least by new metric measures - from using a part of it as working capital.

From comments elsewhere  - they may have to hold just 20% of CCBs in cash for refunds etc.  (Based on a comment in same report that others judged unhealthy may be asked to hold more than 20% - rather than reading the whole thing)

So unless I have missed it - don't see Ofgem rushing to mandating MVDD as an option - for supplier stability or cost basis - well not arguably at DD rates anyway.

And no I dont work for a supplier.

And as prepay now at least on average cap now £48 cheaper than DD - it might not be the MSE cost saving champion in any case. MVDD is maybe more convenient than prepay for users - but in other spheres - you are sometimes charged a premium for convenience. 

(Edit note linked last 2 paras to make sure comparison of convenience clear)

bob2302

Scot_39 said:

MVDD is maybe more convenient for users - but in other spheres - you are sometimes charged a premium for convenience.

I'd say it's the other way around. 

EssexHebridean

I suspect Scot was meaning by comparison with pre-pay?

bob2302

EssexHebridean said:

I suspect Scot was meaning by comparison with pre-pay?

I'm pretty sure he wasn't.