Energy cost breakdown

Annelii

Why are energy providers not required to give a breakdown of factors affecting a price rise, especially whether it is due to usage which you can do something about or external factors which you can’t. My new direct debit from Octopus has gone up 50% but I don’t know why because they just say it could be due to x, y or z. My Fitbit can tell me if my fitness is dropping so then I can do more exercise to remedy. An equivalent for energy would be really useful. Their computer system must know, so why can’t it spit it out?

QrizB

Annelii said:

Why are energy providers not required to give a breakdown of factors affecting a price rise, especially whether it is due to usage which you can do something about or external factors which you can’t. My new direct debit from Octopus has gone up 50% but I don’t know why because they just say it could be due to x, y or z. 

A change in DD is not a price rise.

A price rise would involve a tariff change.

If your tariff hasn't changed, the only likely reason for an increased DD is that you're using more energy than you told Octopus you would.

All your energy consumption data is available to view on Octopus's website or app, broken down in slices of 30 minutes, days, months and years. It will let you see how your energy use compares to your initial estimate.

squirrelpie

QrizB said:

A price rise would involve a tariff change.

Octopus has several tariffs where the price can change every day or even every half-hour, so whilst I agree that it should be possible to work out what's caused the increase from available information, that bit isn't correct.

In my case, there was another factor. I was getting payments from Ripple applied to my account but their estimation program didn't take account of them. So they wanted to set a much higher DD than I thought reasonable. So I moved my account to monthly-pay-for-what-you-use DD.

Scot_39

Remember annualised DD plans at many suppliers - Ovo, Octopus etc are also moving to zero minimum balance - theirs an Octopus blog page that says their reference level for annualised DD calcs was iirc 5 weeks in credit - in Apr. Yes from a quick google

https://octopus.energy/blog/direct-debit-payments/

"We then work out where your balance is expected to be in April - If you’ll have less than five week’s credit at the beginning of April, we’ll work out the difference and spread this over 12 months as a balance-adjustment and add this amount to your suggested monthly payment."

It will be interesting to see what happens to Ofgems CCB level reports as more and more are shifted to it.

So it can be because you simply hadn't paid enough in the past to drag the minimum annual credit cycle up to that level.  Even if your now paying enough to cover actual usage.

And the trade off of that credit balance - I havent checked current cap - but the annualised DD cap was at one stage c£120 cheaper than standard credit - in part based on maintaining credit balances - reduced credit risk and supplier cashflow / operating cost implications.

Annelii

Thanks all, I know my usage hasn’t changed, so the most likely explanation is that Octopus over-adjusted my DD down when my balance grew too high so they’ve now re-adjusted it back up. However there was a clear explanation about the reason for the first adjustment but nothing this time. I still don’t think it’s acceptable to increase a DD by 50% with no explanation. I realise it’s not a regulatory requirement to provide a breakdown but it’s very consumer unfriendly especially given that the computer system ‘knows’ very well what data it based its adjustment on and whether any change is due to usage or some other factor. 

Qyburn

With Octopus you have the option of switching to monthly variable direct debit. The price doesn't change, but each month you pay for exactly what you've used. 

Scot_39

Annelii said:

Thanks all, I know my usage hasn’t changed, so the most likely explanation is that Octopus over-adjusted my DD down when my balance grew too high so they’ve now re-adjusted it back up. However there was a clear explanation about the reason for the first adjustment but nothing this time. I still don’t think it’s acceptable to increase a DD by 50% with no explanation. I realise it’s not a regulatory requirement to provide a breakdown but it’s very consumer unfriendly especially given that the computer system ‘knows’ very well what data it based its adjustment on and whether any change is due to usage or some other factor. 

Are you sure they over corrected it - or would they have adjusted it down to clear the credit - often in past over a simple 12 month window - but certainly in a reasonable time scale - but these days things like the spring targets interact as do significant changes in the cap - forcing DD reassessments where warranted.

You could have asked for a full refund in £sss to your bank - and paid a more realistic DD instead.

So how big was the previous credit adjustment - drop that out of the equation - and it's unlikely to have been a 50% jump at all.

Its just you perhaps had forgotten that you werent in fact paying the full price of what you were actually using - and that that discount would obviously not last forever.

That your old DD wasn't a realistic base point - the old DD + discount applied for credit reduction  - was the true base.

Example - for years I've done my own DD calculations - based on an annual target to zero balance - and only once - recently - has my supplier changed them on me - and I think I am now underpaying - so it will need increasing before winter out.

Set DD = ( annual cost estimate from current rates x last years use  - current true credit balance ) / 12

So If was £120 in credit my DD would drop £10 pm

If was £120 in debit -- makes a + my DD would increase by £10.

I had a small credit - under £400 - after the peak - thats a lot for me - as even at peak was paying c £120 pm - largely due to EPG /EBSS complications from my set DD for 6 months - and allowed my supplier just to adjust my DD down - it wasn't clearing very quickly - so I took half out as a lump sum - after a year - and was warned my DD would go up to compensate  - and even then my DD was down around 20-25% on what it should have been for my use.

At one stage my DD was actually lower than my summer monthly usage statements. Let alone my average or my winter - its a meaningless number in that respect - once adjustment factors come into play.

I put my DD back up - by 33% - (to remove my credit offset and cover a rate / cost rise prediction) when my balance was predicted to be around £4 at end of Mar this year - and the cap went up - to match the annual cost /12 from my Mar cap notification letter - electricity unit rates on aver nearly +9% part of that cost rise - but now that the caps back to cJan levels - my supplier has dropped it back down 12% - with the new cap predicted annual cost (and a couple of abnormally low use months even for me).

It's important to realise that DD is never ever likely to be exactly your actual annual true cost / 12 - just a best guess with no other complications like past history or special allowances - let alone the current month (the whole point to smooth low - summer and high - winter bills) on an annualised plan - and keep your own handle on what the real costs are - and where you are in the credit cycle (I'd say credit / debit cycle - but thats increasingly no longer the suppliers aim).

QrizB

squirrelpie said:

QrizB said:

A price rise would involve a tariff change.

Octopus has several tariffs where the price can change every day or even every half-hour, so whilst I agree that it should be possible to work out what's caused the increase from available information, that bit isn't correct.

Possiby an over-assumprion on my part, but if OP was on Tracker or Agile I'd expect them to know as much!

debitcardmayhem

Annelii said:

Thanks all, I know my usage hasn’t changed, so the most likely explanation is that Octopus over-adjusted my DD down when my balance grew too high so they’ve now re-adjusted it back up. However there was a clear explanation about the reason for the first adjustment but nothing this time. I still don’t think it’s acceptable to increase a DD by 50% with no explanation. I realise it’s not a regulatory requirement to provide a breakdown but it’s very consumer unfriendly especially given that the computer system ‘knows’ very well what data it based its adjustment on and whether any change is due to usage or some other factor. 

Is your account in debit or credit, at this time of year you ideally should be in credit. Only you can say so everyone else is guessing.

born_again

Annelii said:

Thanks all, I know my usage hasn’t changed, so the most likely explanation is that Octopus over-adjusted my DD down when my balance grew too high so they’ve now re-adjusted it back up. However there was a clear explanation about the reason for the first adjustment but nothing this time. I still don’t think it’s acceptable to increase a DD by 50% with no explanation. I realise it’s not a regulatory requirement to provide a breakdown but it’s very consumer unfriendly especially given that the computer system ‘knows’ very well what data it based its adjustment on and whether any change is due to usage or some other factor. 

Octopus seem to go OTT on monthly DD.
Currently £515 in credit. Paying £100 a month for the last 2 months. Last 2 months usage sub £100. Biggest winter bill £190 in January Lowest balance after DD £379 in March. Previously paying £150, April balance £400

Octopus estimate DD should be paying £194 a month, has been around that area since April. Not a chance. At that amount I would be over £1000 by time winter hits.

At least Octopus allow you to set your own limit.

badmemory

My answer would be that they are expecting massive increases in costs this winter.  I am already over the £1k.  But I am letting that ride because with fairly new solar I think it has thrown their systems a bit of a wobbler.

I am sure the general increase in DDs cannot be anything to do with ofgem telling them they need higher financial reserves.