Octopus increasing my direct debit

Scot_39

pseudodox said:

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.

And when annual DD was introduced it was introduced at a "discount" to standard rates.

And many now still think of it as a discount on DD - rather than say a penalty for standard credit ( for paying until recently typically 3 months in arrears of use - but as some suppliers move 100,000s to monthly cycle that credit period and sums involved reduces significantly) and the default / debt risk associated.

And just like millions on SC and DD pay their bills - millions of others do not.

5.3m homes in UK as of last Jan - were in debt to their suppliers - getting on for 1 in 5.

And why we need to realistic adjust from the belief that paying after consumption is good for pricing.  It isn't - it has a real business world cost.

In part the reason standard credit cap is higher than DD.

And the debts of those unable pay - continue to cost the rest of us - for years now - starting with the supposedly temporary Covid hardship extra "adjustment allowance" set initially iirc at £11 - and increased to £28 as of last April and confirmed to last I guess yet another year in this April's cap just announced (prepay users costs lower).

https://www.ofgem.gov.uk/sites/default/files/2025-02/Summary-of-changes-to-energy-price-cap-1-April-to-30-June-2025_1.pdf

Scot_39

pseudodox said:

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.

I can enter a DD mandate now - and cancel it at my bank anytime before it's taken.

Or if my balance is lower than the demanded amount - my bank will refuse to pay it.

There is no such guarantee.

Scot_39

pseudodox said:

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.

So the employers got a service - one that hopefully earned them an income - and then paid you.  That's good business cash flow.

Paying you in advance - before the work - and before they may have been paid for it - is not.  That would be negative cashflow - in the limit needing borrowing and so interest / financing costs - to cover the outlay.

Expecting energy suppliers to offer MVDD - to supply you then get paid in arrears similar (after consumption - by upto c7 weeks) - is NOT good business cash flow.

pseudodox

Of course MVDD or FDD do not guarantee that payment will be made if as you say it is easy to cancel the mandate.  However you misunderstood my meaning.  Once my MVDD has been paid that's it.  No part of it is at risk of my asking for it back.  It's in the accounts as received income, with no need to show it on the balance sheet as "on account" pending being allocated to an invoice.

Perhaps as you are so philanthropic you would like to pay some of those unpaid bills of those who never pay.  

Scot_39

MWT said:

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;

Although to be fair - that account balance is often only updated once per month - for both energy used and payment credits - so hides much of the potentially underlying cashflow for supplied energy vs payment.

On MVDD (edit just like most other methods at diffreing periods) the monthly update hides the fact that you aren't being asked for funds until upto 31 days later, often with another 2 weeks say for DD to be challenged then taken - and then 3 working days to reach suppliers holding account - and then 1-2 days to reach individual accounts.

Start at £0 balance -  Spend £5 per day

End Day 1 - supplier "out of pocket" by £5

Day upto 32 - supplier out of pocket by £5/day * 31 = £155

Account balance increases from 0 to £155  (but you didn't just suddenly use £155)

Day 46 - Two weeks later supplier requests £155 from DD mandate account

 - IF request paid - 3 working days later - funds arrive in their account - so can be used for future energy purchases from wholesalers.

1-2 days later holding account transaction updates on individual account - so individual balance returns to £0

But in reality have used another say upto 18 days energy at £5*18 = £90 - but shows 0.

Rinse / repeat.

Which of course they may (so "out of pocket") or may not have paid the energy suppliers and network operators for.

Scot_39

pseudodox said:

Of course MVDD or FDD do not guarantee that payment will be made if as you say it is easy to cancel the mandate.  However you misunderstood my meaning.  Once my MVDD has been paid that's it.  No part of it is at risk of my asking for it back.  It's in the accounts as received income, with no need to show it on the balance sheet as "on account" pending being allocated to an invoice.

Perhaps as you are so philanthropic you would like to pay some of those unpaid bills of those who never pay.  

It's nothing to do with philanthropy - especially as we already do - as given no choice - via policy costs, margins and of late the current / future £28 adjustment allowance.  (Although switching to prepay could reduce that £28 to £9)

The whole point of the cap was arguably to produce a fair price for those not on special terms - fixes etc.

MVDD is not the same as annualised DD - its a different cash flow - far more akin to that of monthly standard credit being introduced at likes of EDF and Ovo. 

Are they - should they in future - be getting a lower billed rate vs cap SC rates as a result - now not on 3 monthly terms - but monthly ?

Edit: if old c3m terms is worth a cap difference of as of April 25 - £120 - should one month not be say closer to £40.

If so - should those on MVDD paying after use - benefit from the same "discounted rates" for those paying for their  energy in advance - year round ?

FreeBear

dosh37 said: 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.

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.

My thermostat is set to 18.5°C during the week and 19.5°C at the weekend. Heating kicks in each morning at 08:00, switching off once up to temperature. Does the same at 12:00, and again at 20:30 (plus 15:00 & 18:00 at the weekends). Depending on how cold it has got, the boiler will run for 30mins to 2 hours. Looking at the data collected from the boiler, most of the energy produced (and gas consumed) is in the first 30mins. The next 30 mins or so, the boiler could be burning 50% less.

Rather than freezing your wotsits off, try running your heating for an extra 30 minutes - You may be surprised to find that your gas consumption doesn't increase as much as you might think (assuming you have a fairly modern condensing boiler). All bets are off if it is an ancient Baxi back boiler.

January was the coldest month for me so far. Used just shy of 670kWh for just under £50 - Also have a log stove that gets lit some evenings at the weekend.

pseudodox

@Scot_39
Of course MVDD is a monthly credit option.  Would you like to indicate where exactly I have argued that it should be at the same discounted rate as FDD?  Currently it is at the same discounted rate because that is how my energy supplier chooses to operate. I would happily pay exact amount on receipt of bill, but they opt to wait 10 days for the DD.  Seems to work for them.  And by paying SVT I am no doubt subsdising fixed rate deals, whilst those on FDD are subsidising me.  So it works very well for me and I can enjoy low summer bills against what I regard as normal winter usage of energy & my personal cash flow leaves pennies in the piggy bank for a holiday.

Currently fixed rate deals being offered may/may not work out for both customers and suppliers - it's a gamble on both sides in this volatile world.  When another company goes belly up because they are not making enough to cover their costs we will all once again be expected to bail out those customers who have "lost" their FDD credit built up with that company.  If my company goes bump no-one will be bailing me out.

There are people who are prepared to pay higher rates for paying their bills by cheque/cash/transfer etc.   Again this is personal choice & they should be free to make it.  Thankfully we no longer penalise people who for whatever reasons have pre-payment meters - never did understand why they should pay over the odds when they are paying up front.

You completely miss the point that I support that we should ALL have a choice as to how we pay for something.  I imagine there will be a lot of expenses in your life that are different to mine and how you choose to pay them is entirely up to you.  I pay my credit card off every month without fail, many do not.  Should it be legislated that everyone should do the same as me? No, of course not!  Who pays for all those credit card debts?  We all do.

Scot_39

You may not have said that it should be at same rate - but others have certainly expected it to be and remain to be.

I am glad that you see it as a monthly credit option though - in my mind now far closer to those on monthly billed standard credit than how firms are increasingly operating annualised DD - many do not.

I run a credit balance - about to reach zero with next bill I suspect - that had a tiny cost to me in lost interest in my current account and at an individual level a small benefit but en masse when millions of us do so - a non trivial benefit to supplier cash flow, operating costs, balance sheet and so market stability as acknowledged regularly by Ofgem.

Without those billions in positive cash flow - I suspect we would be paying far more e.g. in the debt special £28 to balance thd £3bns plus in bad debt on suppliers books, to keep them afloat.

QrizB

pseudodox said:

 Currently it is at the same discounted rate because that is how my energy supplier chooses to operate. I would happily pay exact amount on receipt of bill, but they opt to wait 10 days for the DD.  Seems to work for them.

They have no choice.

The rules of the DD system say that they need to give you ten days notice of any change in the DD amount. They don't know what your monthly bill will be until you've used the energy, so they can't tell you what your new DD will be until they issue the bill. Then they need to wait those ten day.