Energy Direct Debit - Predicted to be in plus at FYE but they want to increase

MrSerling

Hi OVO customer here.
I have a direct debit, I'm currently in a positive account balance by a few hundred pounds - but I realise that will reduce over winter. That is not the issue. OVO predict from my usage and current DD (£118) that I will finish in a plus at 31st March next year (i.e. after the winter). 
They say they will increase my DD from £118 to £135 per month.
Surely if they are predicting I will finish the year in a positive, they can't change my DD? (Again, I'm not talking about using up my current positive balance - NO, they are PREDICTING, I will still be in a small positive at year end!!)
What are the rules around this? There must be plenty of people getting this without realising it?

Scot_39

Are you 4 weeks or is it a month plus by end of March they aim for - or just plus ? 

£17*5 or 6  months = £85 or £102  - amount required to raise you towards say your current £118 level.

Welcome to the price we all are being faced to pay to counter the debt mountain - on top of the £50 in the cap.

Part liberal left policy on cutoffs and not allowing suppliers to enforce prepayment meters.

Ildhund

MrSerling said:

What are the rules around this?

OVO changed their Direct Debit policy a few months ago to aim for a positive balance at the end of winter. The amount of credit was set to '1 month's payment', which turns out to be 1/12 of the projected annual cost. This cost is just the sum of the Future Annual Consumption figure multiplied by the current unit rate plus the standing charge for 365 days. There is no element of forecasting involved, so predicted changes in wholesale prices, in heating costs or in the composition of the standing charge aren't taken into account. 

They also conduct a review once a quarter, so that's probably where you are just now. You should be able to reduce the DD amount by 10%, which will persist until the next review. 

Two more points to note:

• "I'm currently in a positive account balance by a few hundred pounds" doesn't really say very much, because your balance can vary significantly through the billing period. I posted this graph of my own balance last month to illustrate this:  
    
  
  The balance increased more than tenfold overnight before the DD was taken.
    
• In November last year, OVO customers saw the 'end of winter' milestone suddenly shift from 31 March 2025 to 31 March 2026. This is helpful for those in debt (12 extra months to pay it back in), but not so nice for those in credit, who in some cases could consider taking a refund of some of an overly large credit balance. Watch out for this change in the next few weeks.

WiserMiser

The Guardian reports that the future of OVO is in doubt.  

https://www.theguardian.com/business/2025/sep/30/future-of-ovo-energy-in-doubt-after-failing-financial-stress-tests

MrSerling

Many, thanks for the responses. The key here I think is the one month plus, if that is the rule they have introduced. That makes sense and the 6mth additional calc basically reaches the one month existing DD figure, or one month predicted cost..........I note its not very well explained on the site. It should be clear on the summary! 

Seems wrong, if you're in a plus at the end of the winter then existing DDs should be considered enough in my opinion. Seems to favour risk for the company......which no doubt will be lost if it folds!

QrizB

MrSerling said:

Seems to favour risk for the company... which no doubt will be lost if it folds!

Customer balances are protected in the event of supplier failure.

OVO is currently in a bit of financial trouble, due to a shortage of liquidity. Encouraging customers to remain in credit will help with this.

WiserMiser

Unless you'd be hit with exit fees, why not Ditch & Switch to a friendlier company that offers Variable Monthly Direct Debit?  You'll then be in full control.

Scot_39

Until others follow Ovo and drop it.

To meet their capital reserves targets in the face of still growing debts.

Other big players are also failing it - Octopus - now irc the biggedt by customer numbers - for instance 

Direct debit should be cheaper than mvdd any way.

To reflect the increasingly positive credit balances impact on supplier cashflow and opersting costs.

Part of the reason the annualised DD rarte is c£10pm less than standard credit. 

Ofgem doesn't produce a cap based on MVDD or insist suppliers offer MVDD.

dunstonh

MrSerling said:

Hi OVO customer here.
I have a direct debit, I'm currently in a positive account balance by a few hundred pounds - but I realise that will reduce over winter. That is not the issue. OVO predict from my usage and current DD (£118) that I will finish in a plus at 31st March next year (i.e. after the winter). 
They say they will increase my DD from £118 to £135 per month.
Surely if they are predicting I will finish the year in a positive, they can't change my DD? (Again, I'm not talking about using up my current positive balance - NO, they are PREDICTING, I will still be in a small positive at year end!!)
What are the rules around this? There must be plenty of people getting this without realising it?

Being just a few hundred pounds in credit in October is probably on the light side.
Winter spending tends to end of April/early May. 

A small increase seems logical.

They are not predicting.  They are estimating using assumptions.   Any estimate will be wrong.   Only hindsight will tell and it will depend on next two quarters pricing (which is unknown) and the weather (unknown).

Going with a budget plan always involves some margin of error but it all comes right in the end.  Such as small difference between £118 and £135 seems a bit silly getting worked up over. 

Ultimately, if you dont like it, you can always move to the full bill method each month.

Bendo

Scot_39 said:

Direct debit should be cheaper than mvdd any way.

To reflect the increasingly positive credit balances impact on supplier cashflow and opersting costs.

Part of the reason the annualised DD rarte is c£10pm less than standard credit. 

Ofgem doesn't produce a cap based on MVDD or insist suppliers offer MVDD.

Ofgem don't distinguish between fixed or variable direct debit sonthe cap for DD obviously applies to both.

Scot_39

Yes they kind of actually do - if you actually look at how the payment method offsets to nominal costs are calculated - that drive the DD / SC cost splits basis for the caps.

The factors that as of today mean SC is now £135 pa more than annualised DD payment.

If Ofgem meant it to apply to MVDD - which is very frequently used to run accounts permanently in about 1 months arrears - almost identical infact to those who pay the £135 permium now on monthly standadrd credit vs old quarterly standard credict - they would factor that higher debt impact into their costings.

They didnt - and I beleive they still don't.   Although I'd have to hunt around for updates to the old Appendix 8 documentation that was done prior to the introduction of the cap to be 100% sure to look for updated % offsets.

And would probably as a regulated payment rate - insist suppliers - all suppliers - support it.  Ofgem dont - and so suppliers like Ovo who did - no longer do.

Now that big firms like Ovo and Octopus - and I guess many others although not checked their terms - are moving annualised plans to 1 month minimum credit  and I suspect 1.5-2 months average across cycle credit (on the pasis of 2-3 months credit on top required ahead of winter).

How many on MVDD would be willing to put down say 2 months average payment as a credit float - only revoerable on switcing supplier ?