Octopus increasing my direct debit

dosh37

If you look at the chart I uploaded and draw an average curve through the cyan sawtooth then the credit never drops below zero even in the winter months. My average credit for the year looks to be around £120. I expect most people use a lot more energy than I do: My room 'stat is never set above 16degC and the heating is only on for 1hr in the morning and 1hr in the evening. As a pensioner at home all day, I feel freezing cold most of the time. Even with my relatively low usage and DD credit, if you multiply £120 by 6.8 million customers that's £816,000,000.

I think I'm going to have to switch off the CH timer and manually turn the heating on for just one hour in the evening.

MWT

paradigital said:

I'm not sure where this suggestion that Octopus want you in credit at all times comes from?  Their own blog suggests not: https://octopus.energy/blog/direct-debit-payments/

... from the T&C's...

8.3.1 you should keep your account in credit and we will track and carry the balance forward to the next month’s Statement of Account;

Scot_39

Gerry1 said:

Scot_39 said:

MVDD isn't part of Ofgems pricing model - there is no cap for it.

AFAIK when it comes to capping, a DD is a DD regardless of which flavour it happens to be, MVDD doesn't bust a price cap.

If dozy Ofgem were any good they'd have instructed all suppliers to offer MVDD as an option.  Fixed DDs are widely misunderstood and with price caps changing every three months they're becoming even less relevant.

It would provide a level playing field and reduce the risk of dodgy companies using customers' credit balances as Ponzi-style cashflow and going bust, as many did.

If that was the case all suppliers would offer it - they do not.

In fact one that did - has since stopped.

And as to the reference to customer's credit - that is exactly why Ofgem have consistently refused to 100% ring fence CCBs.  Again Ofgem are on record as saying ring fencing CCB's would in fact risk increased supplier instability and tariff pricing. Which is why arguably even for their new supplier financial stability metric launching soon - only those failing it will have to keep more than 20% of the CCB balance as cash - for those requesting refunds etc.

Essentialy its quite simple - they may have to borrow money to cover delayed payments. IIRC the average credit balance was reducing towards £200 last time I checked - they either use that to buy energy to supply us - or they borrow the money instead - at 5% - that's an extra £10 per year. 

And if anyone decides not to pay - no mater how unlikely for most of us that might be - over 3 million households are now in debt to suppliers - but theres the ultimat case of those with deliberate intent - say closing their bank account or cancelling their DD - "doing a midnight flit" in old speak - so suppliers can lose everything for the month.  That's two modes of credit risk - not possible if on annualised plans the balance is always positive.

Ofgem have modelled price differentials - many do not agree with their models - but that includes business cash flow and credit risk - and there are costs involved - with paying in advance of use and paying after use - I say in arrears (but some object as not paying after agreed payment date)  - and these are reflected in the three existing price cap models. 

And at cap levels part of why standard credit is more expensive than DD - by over £100.

And MVDD does not meet Ofgem's expectation for annualised DD payment ever - that of it being in credit for at least part of the cycle - as will always be paying after actual energy consumed - and as some suppliers are now explicitly moving towards - paying in advance effectively throughout the complete annual cycle.

Gerry1

Dozy Ofgem is far more aligned with the industry than with consumers.  Their failure to effectively regulate the energy supplier market means that customers have been left to pay the £2.7 billion cost of supplier failures. This means an extra £94 per household, a cost that will very likely increase.

That's not my opinion (apart from the first sentence), it's that of the Public Accounts Committee.

Scot_39

EssexHebridean said:

Gerry is correct - DD is DD for the purposes of gaining the discounted rates which come with it, it’s irrelevant whether it is a fixed or a variable DD that is set up.

And have you ever wondered why not all UK suppliers offer it ?

I see it as more of a marketing tool - just as discounts on fixes without demanding 100% payment for the year upfront are - they are a business risk approach.

That does not meant they are Ofgem approved / mandated - like the other 3 standard payment methods - annualised DD, standard credit and prepay.

Gerry1

Scot_39 said:

EssexHebridean said:

Gerry is correct - DD is DD for the purposes of gaining the discounted rates which come with it, it’s irrelevant whether it is a fixed or a variable DD that is set up.

I see it as more of a marketing tool - just as discounts on fixes without demanding 100% payment for the year upfront are - they are a business risk approach

Fascinating Fact: Before privatisation, absolutely everyone paid for usage in arrears.

The meter reader read the meter quarterly, a bill landed on the doormat, you paid for the exact amount you had used by cash or cheque, perhaps at the Gas Board and Electricity Board shops in the High Street.

And that was that.  If not, a reminder would follow and ultimately a red warning letter threatening disconnection.

DDs of all flavours and paying equal amounts monthly are relatively recent.

Edit: Typo

pseudodox

Facinating Fact: Before privatisation, absolutely everyone paid for usage in arrears.

And it was THREE months in arrears.  By the time people paid up after the final red warning it was probably nearer to six months.  A MVDD provides guaranteed monthly funds - no requests for refunds of excessive credit to be accounted for on a balance sheet.

Scot_39

Gerry1 said:

Dozy Ofgem is far more aligned with the industry than with consumers.  Their failure to effectively regulate the energy supplier market means that customers have been left to pay the £2.7 billion cost of supplier failures. This means an extra £94 per household, a cost that will very likely increase.

That's not my opinion (apart from the first sentence), it's that of the Public Accounts Committee.

And yet Ofgem's boss has just had his 5 year contract extension under the new Labour administration - did they ever read the reports from PAC and other's regarding Ofgem's clear failures - when making that decision ?

But in all fairness Ofgem is caught between 2 "rocks" and a hard place - suppliers who need a certain profit to make it worth while operating as UK energy resellers and govt policy that sets a financially - in short to medium term - a ruinously expensive in terms of transition costs - renewables policy and furthermore loads charges over and above essential energy supply costs (GBIS, recently prepay levelisation and now EII support via NCC) to our bills - and consumers unable to pay the total price that requires.

Just as energy charities now see the zero SC tariff options will fail to help many of the vulnerable - and so rejecting the Ofgem proposals as of the latest update.

Over 3m homes in over £3bn debt needs far more than mere tinkering around the edges.

And realistically Ofgem are unable to address that without serious changes to govt policy.

Scot_39

Gerry1 said:

Scot_39 said:

EssexHebridean said:

Gerry is correct - DD is DD for the purposes of gaining the discounted rates which come with it, it’s irrelevant whether it is a fixed or a variable DD that is set up.

I see it as more of a marketing tool - just as discounts on fixes without demanding 100% payment for the year upfront are - they are a business risk approach

Facinating Fact: Before privatisation, absolutely everyone paid for usage in arrears.

The meter reader read the meter quarterly, a bill landed on the doormat, you paid for the exact amount you had used by cash or cheque, perhaps at the Gas Board and Electricity Board shops in the High Street.

And that was that.  If not, a reminder would follow and ultimately a red warning letter threatening disconnection.

DDs of all flavours and paying equal amounts monthly are relatively recent.

As is the cap for the pricing models - based on the traditional payment methods at the time - annualised DD, standard credit and prepay (the prepay cap in effect came in c2 years earlier than the credit - i.e standard credit / DD cap price caps c2017 vs 2019 iirc).

pseudodox

I wonder how many people who feel that paying a guesstimated amount up front for energy, water etc receive their salary at the start of the month.  When I was working I got paid AFTER my employer had received a month's worth of time & effort from me.  My state pension is also paid in arrears.