Unreasonable charges - Octopus

dander

I was pretty stunned this morning to get an email from Octopus saying they planned to increase my monthly payment by £240. That's an extra £2880 a year they are deciding to help themselves to. I have ended this winter just under £400 in debit to them, which I have paid as a one-off payment. And that's after a pretty cold winter when I've been unwell so using the heating more than usual. So this is over £2k they want me to put in their bank accounts for absolutely no reason and I am likely to just have to reclaim after overpaying. When I tried to change it online, their system blocked me from reducing it by more than £100. 

I'm have emailed them to get it reduced back down, and await what they say, but I am really shocked at this behaviour from Octopus. I joined them because I thought they were a reasonable ethical organisation that was not set up to screw the customers like other companies - but this wild increase seems to be only designed to essentially borrow money interest free from customers.

Green_hopeful

It happens quite often. Its just the algorithms that are calculating your bills. My son has a 1 bed flat and the energy company estimates he uses 20,000 kwh gas per year. Its nearer 2000 kwh. Every three months they try to change his direct debit to loads of money. I just email and ask them not to do that and i get an email back agreeing. Hopefully someone at Octopus will resolve it. 

wrf12345

Or go for variable direct debit and never be bothered by this again, you probably still have to phone them up to get it done and you can skip almost a month if you get the timing right (you still pay but good for cashflow), and they will tell you a week or two in advance how much they are taking.

victor2

I had a similar situation with Octopus and couldn't reduce it online to what it was before. I emailed them with my justification for leaving it where it was - that I would end my current fix with them slightly in credit if my usage was the same as last year - and they replied almost immediately saying it would be left unchanged.

FlorayG

All companies do this, it's automatic. You just call them up and they remove the change.

victor2

wrf12345 said:

Or go for variable direct debit and never be bothered by this again, you probably still have to phone them up to get it done and you can skip almost a month if you get the timing right (you still pay but good for cashflow), and they will tell you a week or two in advance how much they are taking.

This does of course work, with the caveat that you must be prepared for higher bills in winter, having enjoyed a relatively "cheap" summer. 

Scot_39

£240 pm relative to what ?  Without context it's a meaningless figure.  Is that a 50%, 100% etc increase ?

What were you paying, what's your annual forecast cost at April's new rates.

You say £400 debt and £2880 more over DD and net £2000  - but have you factored in the new rates on your total consumption.

Do a simple calc - take last years kWh (for me a more average than harsh winter kWh energy) and your new rates come Apr 1st.

I just increased my DD myself using 

New DD = ( annual consumption x new rates - outanding credit ) /12

After a mild winter I might add 5-10% margin or use my long term average rather than last 12 months.  This month used EOns projected 12m cost - and no margin as they had c10% more kWh cf bills rolling 12m kWh estimates.

My standard approach before epg and ebss during crisis. Now finally exhausted some credit from crisis epg discounting for 9 months.  Some of it rebated well over a years ago.



If you are genuinely going to be £2000 over in 12 months time and cannot reduce online  (perhaps a sign your payment not cleared as others talk of setting theirs as low as £10).  
Then phone Octopus - give them your figures and say that is what you want to pay - if you want to remain on annualised plan DD rates.  Also ask them to check impact of recent cleared debit if worried not factored in (another £35 pm)

If not factored in the recent £400 payment -that means your DD might have to cover the 2x£400 =£800 plus  for this and last year and the increase on the whole amount  should tge rates increase as they are yet again for svt.

Companies are entitled to demand payment ahead of goods if they so choose.
Ofgem allows them to set zero minimum balance credit terms.  And positively encourages them not to allow debt accumulation.

You / they let £400 debt build up - and even although cleared - a clear sign even at cheaper svt if on it unit rates you weren't paying enough at your old DD level.

On some octopus contracts their customers here have clearly stated that they explicitly say you must maintain your account in credit. 
Ovo iirc explicitly now state that for all year round on annualised DD plans.  And even state the mechanism / time period to those in debt for part of the cycle to transition to it in their correspondence.

Tesco don't let you take your trolley out of the store without paying.Why expect energy suppliers to do likewise ?

You save iirc soon to be £120 at cap tdcv for paying by direct debit over standard credit.  Low users less, high users which presumably you are if asked to pay that much - more.
At even 5% savings rate - that £120 would need an average balance of £2400 - probably far more these days - held by suppliers so not in a high rate saving account to cost you the same in lost interest.

A saving offered to you via capped rates in part based on annual plans carrying at least part time credit balances- paying in advance not in arrears of consumption and a greatly reduced credit risk factor cost that comes with it.  All info readily available as per Ofgem published svt rate calculations in past years.

I am sure someone will come along in a minute telling you to switch to mvdd if can budget the winter vs summer bill variation.
But that is not the basis upon which Ofgem set the DD vs SC cap differentials.

You might not like being in credit to them,  suppliers and Ofgem don't like you being in debt to them and given now struggling under £bns in debt - have have become increasingly less willing to accept the old status quo.

bristolleedsfan

wrf12345 said:

Or go for variable direct debit and never be bothered by this again, you probably still have to phone them up to get it done and you can skip almost a month if you get the timing right (you still pay but good for cashflow), and they will tell you a week or two in advance how much they are taking.

Perfect if O/P is able to clear debit balance as well as pay ongoing charges.  "I have ended this winter just under £400 in debit to them"

Swipe

If you are going to switch to variable direct debit and have the cash to pay off the current debt, now is the perfect time of year to begin and then start paying what you previously paid for your monthly direct debit into an easy access savings account.

dander

Scot_39 said:

£240 pm relative to what.  Without context it's a meaningless figure.

I didn't say increased TO £240 pm I said increased BY £240 pm. I also didn't say I have any problem with paying my bills  or that I would have any issue with the DD being raised by a sensible amount to meet my requirements, so why you went off on a massive rant about me wanting free energy is a mystery to me. 

Maybe it is "just algorithms" but what kind of algorithms are they using that suddenly decide in the next year I am going to spend more than £2k more on energy than I ever have before? Even if you increase the DD to pay off the £400 debit, plus build up a £400 buffer ahead of next winter, you still only end up at a £66 a month increase - roughly a quarter of what their algorithm has imposed on me. That's is way beyond any reasonable margin of accuracy.

EssexHebridean

Scot didn't suggest you were saying it was an increase to that level - they were asking what sort of percentage increase that was. 

I'd guess that the combination of your energy use spiking (perhaps you could have developed a medical issue that will mean you require additional heating going forwards), the fact that you have ended this winter in debt to them, and that prices generally are on the increase is why the system has tried to apply this uplift. It is just a system thig though - this isn't down to someone sitting behind a desk at octopus rubbing their hands together in glee and contemplating what they can do with an extra £2k a year from you! 

Suppliers do have a duty to ensure that payments are fair, reasonable, reflect use and will adequately cover that use - what they don't have is the ability to do anything more than look at a very few known (to them) facts to make their decisions. If they get it wrong, it honestly is as easy as doing your own sums, factoring in anything that has changed (like increased prices), then work out what you believe your DD should be, and give them a call or drop an email to discuss. In pretty much all cases, this ends up with a revision to the figure the algorithm came up with.