Octopus increasing my direct debit

Scot_39

dosh37 said:

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.

CCBs

"The average amount in credit energy accounts for people who pay for their gas and electricity by fixed Direct Debit was £3.53 billion"

https://www.ofgem.gov.uk/publications/domestic-energy-customer-credit-balances-october-2023-september-2024

And on the flip side

Debt and Arrears - c £3.82bn Q3 24

https://www.ofgem.gov.uk/publications/debt-and-arrears-indicators

Debt winning - and without the CCB offset on operating cash flow and account balances ....

And in terms of financial impact at your level  

c5% in interest on £120 -  £6 at best if shift the money.

Your savings on the bill - around 5% on £95x12 = £57 at  old DD, £68 if new 19% higher correct as rough guide, for annualised DD vs standard credit rates.

(Newly announced Apr cap to be an even higher £120 less for DD than standard credit for median consumption)

EssexHebridean

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.

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.

They don’t all offer it because a) they don’t have to and b) it’s nowhere near as good for business cashflow as a fixed DD with an assumption that accounts must remain in credit at all times is. 

Should it be the standard method of payment? No - absolutely not. It definitely isn’t for everyone - we see on here on a regular basis how a lack of personal financial education has impacted people’s levels of debt in particular, and the risk that someone who has simply never been taught how to budget gets to midwinter and is landed with a bill they just have no money to pay is too great. Similarly it certainly doesn’t suit any household where one party maintains a controlling behaviour pattern around the finances.  For someone who runs a tight ship financially, has learned about budgeting and setting money aside for future expenses, it can work superbly.  The middle ground is of course a fixed DD but with a close eye kept on credit levels -v- use. 

Scot_39

EssexHebridean 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.

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.

They don’t all offer it because a) they don’t have to and b) it’s nowhere near as good for business cashflow as a fixed DD with an assumption that accounts must remain in credit at all times is. 

Exactly my point.  

And as Ofgem inital cap and Appendix 8 costings - even in partial credit for at least part of the cylce.

And a mechanism that would save someone with the average just over £233 CCB - which is falling pretty quickly in last couple of updates - see Ofgem data to Sep 24 above - under  £1 a month in interest at the old 5% level - these days less - even if did move it into a decent savings rate account.

But save then around £112 now and £120 come April - at cap TDCV - for DD vs SC rates - the convenience and bill smoothing many require - verses standard credit - saving £10 pm

A net saving of £9pm on DD vs SC - strikes me as a pretty fair deal.

pseudodox

I wonder what proportion of the £3.8bn debt/arrears is long term debt, some of which will never be paid off.  In itself it is a meaningless figure &  I would hazard a guess that long term arrears is a bigger percentage than the short term debt of those on MVDD who always pay up regularly on time.  Long term unpaid debts cost a lot to administer, with pursuing the non-payers, especially when the supplier is not allowed the option of disconnection.

The suppliers do have a choice re DDs - they could offer to take my payments as soon as the bill arrives by bank transfer & I could waive my right to the DD guarantee.  I would happily pay weekly for my energy.  I like my lower summer bills, as I have a number of annual expenses in the summer months (motor costs, insurance etc) for which I need larger sums available.

mac.d

dosh37 said:

(Removed by Forum Team)

OK, you said in your original post that you'd looked at the Octopus energy usage prediction. Alter your direct debit on it to put you slightly in credit when your 12M fix ends in Oct 2025, and that's you sorted.

FreeBear

dosh37 said: All I know is my boiler is an inefficient 40 year old Gloworm fuelsaver MK2 with a pilot light thats costs £50/year to run.

If I turn off the pilot light in the summer, the jet gets blocked and it won't restart  I can't afford to have the boiler replaced.

I don't have double glazing. Labour have cut the winter fuel allowance, my direct debit has increased by 19% and I am freezing cold!

When was the boiler last serviced ?

I used to have a Baxi back boiler, and would turn the gas supply off during the summer months. Never had issues with the jet(s) getting blocked.

Councils are now applying to central government for funding to provide help with heating & insulation grants - Worth contacting your local council and get yourself on the list (if you are not already on it).

teaselMay

It sounds as though you've a reasonable feel for how much your direct debit should be OP. Octopus are pretty good at accepting that you're keeping an eye on your account and keeping it in credit. I withdrew my credit balance down to £30 (it was only up to about £190 in the first place) and when I asked to change tariff asked them to leave my direct debit alone - it's set at £70 at the moment which is roughly my winter bill, but they were suggesting just over £100 last month, they accepted that I'll increase it if I need to or make one off payments to make sure it's covered. True to form my bill this month will be less than £70

Have you checked whether there are any grants available to help you replace your boiler? It makes my landlord's 20 year old limping along one sound distinctly youthful!

EssexHebridean

dosh37 said:

(Removed by Forum Team)

Ok, no need to descend into being abusive- when you don’t understand things it’s perfectly fine to simply ask for an explanation. As for threads going off topic, sometimes a degree of that happens naturally in a bid to provide as much info as possible. 

DD is a pretty standard abbreviation for Direct debit. I would expect most “ordinary people” to understand that.
MVDD is monthly variable direct debit - Gerry who mentioned it originally was careful to type it out in full, and the post where I first referred to it  said “monthly variable debit DD” at first reference - and I then went on to use the full abbreviation as the explainer was already there. 

Gerry1

@dosh37

TLAs 4U

AFAIK: As Far As I Know

CCB: Credit Card Balance

CH: Central Heating

DD: Direct Debit: Payment leaves your bank account automatically

MVDD: Monthly Variable Direct Debit: amount varies each month, calculated on exact usage.  Large amount in winter, small amount in summer.

OP: Original Poster

TDCV: Typical Domestic Consumption Values.  Typical household annual consumption.  Gas plus two flavours for electricity, Type 1 for single rate, (usually fuel burners), Type 2 for multi-rate meters (usually smaller properties with Economy 7).

SC: Standing Charge

BFN...

Scot_39

pseudodox said:

I wonder what proportion of the £3.8bn debt/arrears is long term debt, some of which will never be paid off.  In itself it is a meaningless figure &  I would hazard a guess that long term arrears is a bigger percentage than the short term debt of those on MVDD who always pay up regularly on time.  Long term unpaid debts cost a lot to administer, with pursuing the non-payers, especially when the supplier is not allowed the option of disconnection.

The suppliers do have a choice re DDs - they could offer to take my payments as soon as the bill arrives by bank transfer & I could waive my right to the DD guarantee.  I would happily pay weekly for my energy.  I like my lower summer bills, as I have a number of annual expenses in the summer months (motor costs, insurance etc) for which I need larger sums available.

The £3.8bn does not include anyone paying MVDD as long as they pay on request.

Their is a breakdown in more detail on the link.

But arrears iirc is 91 days or more after due.