EON advisory

SparkleIT8

Current status £136.46 deficit.  This is for this month only and DD is set at £94.  

EON message:  You're using an average of £4.58 more each month than your current Direct Debit (DD) payment covers, which means your account balance is £221.40 behind where we'd expect it to be at this time of year.

What you need to do.

The quickest way to get your account back on track is with a one off payment of £221.40 on a credit or debit card, and by changing your monthly DD to £97.72. Just tap the button below to make a payment online, or give us a call and we'll help you sort it.

I find this unbelievable that EON is expecting customers to put their accounts into CREDIT (in this case approx. £85.  Why would I/should I do that? Their expectation is that their customers have credit on their accounts then !
(My husband is an OAP and lost his Winter Payment allowance as we aren't entitled to pension credit).

QrizB

SparkleIT8 said:

I find this unbelievable that EON is expecting customers to put their accounts into CREDIT (in this case approx. £85. Why would I/should I do that?

Because their T&C say they'll raise your DD to stop you falling into debt:

4.3.1 We prefer you to pay by fixed monthly Direct Debit. ... We may change the amount to prevent you from getting into debt.

Also:

SparkleIT8 said:

Their expectation is that their customers have credit on their accounts then !

Yes, per the T&C:

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

Scot_39

Ofgem have advised suppliers against allowing accounts to build up debit balances.

Running an account in deficit has an operating cash flow cost - and increases credit risk.

And on the bigger picture of debit turning into debt - those on DD / standard credit are now paying an extra £28 a year as of April cap on to only part cover the costs. 

EOn are not the only suppliers moving to credit based annual DD plan balance management.

Or with the operate account in credit / not debit clauses.

In fact one Ovo iirc - even stopped monthly variable direct debit - probably for that very reason.  

And have recently upped at least one posters DD by c15% - to start their annual cycle with zero balance by end Mar 26 - to do so - so from then building credit going forward for the following winter.

At least when designing the initial cap - as part of the payment method uplift adjustments - Ofgem set the DD rates cheaper than standard credit in part based on the presumption that the then annualised DD rate accounts would operate - at least on average or part of the cycle in credit - based on records from a period upto c2017 they actually did iirc.  As part of the justification for the now c£112 difference in cap between the methods.

molerat

Even Martin Lewis, the big nay sayer of excessive credit balances, reckons you should be around 2 months DD in credit at this time of the year to balance out the higher use over the coming months, if you are running a budget account with variable outgoings you must be in credit at some point in the cycle, common sense dictates that.  If you want to stay in debit then go to variable DD where you pay for your actual use each month but of course you need to be able to budget for much higher bills over winter.

jbuchanangb

This is what I said to E.ON when they suggested increasing my DD:

Clause 4.3.4 of your Terms & Conditions dated 18 July 2022 states

"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; which means you pay your bill in full when you receive one, so the amount may go up or down each time;"

I would be obliged if you would conform to that statement by setting the DD amount to £168.60. If this is not possible, then please change my payment method to variable direct debit, so that I can maintain a zero balance with you.

I had used their most recent expected annual amount adjusted by the balance on the latest bill. They accepted my suggestion, which was actually a reduction on the DD which I had been paying.

bob2302

SparkleIT8 said:

I find this unbelievable that EON is expecting customers to put their accounts into CREDIT (in this case approx. £85.  Why would I/should I do that? Their expectation is that their customers have credit on their accounts then !

Even in the days when they tolerated customers being in debt you should still be in credit in December. For 6 months in debt and 6 months in credit you would expect to break even in mid-July and mid-January. 

Scot_39

jbuchanangb said:

This is what I said to E.ON when they suggested increasing my DD:

Clause 4.3.4 of your Terms & Conditions dated 18 July 2022 states

"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; which means you pay your bill in full when you receive one, so the amount may go up or down each time;"

I would be obliged if you would conform to that statement by setting the DD amount to £168.60. If this is not possible, then please change my payment method to variable direct debit, so that I can maintain a zero balance with you.

I had used their most recent expected annual amount adjusted by the balance on the latest bill. They accepted my suggestion, which was actually a reduction on the DD which I had been paying.

Except you wouldn't be maintaining a zero balance.

Even your account would likely show you in debit from usage charge applied then payment requested until payment cleared from your bank - 3 days min - 6 or 7 on long bank holiday - And then credited from clearing account to your individual accohnt balance.

And if as works at others - you would be paying for energy used on day 1 of 31 day month a minimum of c47 days later.  A negative operating cash flow to supplier.

A cost Ofgem has not built into DD rates - with a presumption of credit in at least part of cycle - and guidance against debit / debt - now that suplliers are now moving to permanently in credit on annualised plans.

The two DD methods are inherently different - and have different supplier cost implications and risks.

Some suplliers don't offer mvdd,  one at least did but since have dropped it.

And if more move over to it - it may actually drag dd rates up if not given a split tariff cap.

What premium are those on monthly standard credit billing paying - I would guess the full cap £112 for near similar negative cash flow position.