Increasing Direct Debit

EssexHebridean

MarkFromCornwall said:

I find it easier not to argue when my energy company increases my DD.  Then when I am in credit by a few hundred pounds I request a repayment which they normally do without arguing and quite quickly.

This is fine if you can afford the increased payments, but not if you can’t. 

Better by far is to do the sums, then challenge any unreasonable demands for increasing the DD. Not least as the more people that do it, the more likely that the energy companies will improve their systems rather than having to constantly waste time discussing the issue with people. 

Scot_39

slynn0493 said:

I've just got off the phone with my energy company after getting an email saying they were increasing my direct debit. I currently pay £240 a month, and they wanted to increase it to £270 because my account "wouldn't be in credit by the end of March". Looking over my usage for last year averaged out at £160 a month, and this year I'm on track for it to average at £185 a month, and I am currently over £150 in credit.  So I am technically overpaying by a huge amount, yet they still wanted to increase! They then hit me with a threat that if my account went in to debit they would share information with credit reference agencies, which I found disgusting. 
I just wanted to check if anyone else has had this experience, or if its something that is being looked in to? It feels predatory.  

Firstly - they could be being a bit pessimistic in their predictions.  And if asking for too much - the only way to meaningfully counter that is with your own numbers.

But they know many will just cave - and others will struggle to produce that counter.

The threat of credit markers seems however over the top - at least for an initial response and certainly so for an account with no previous debt issues.

£150 in credit

As its Nov now - you should have been building credit since say Apr (firms like Ovo, Octopus etc base their minimum credit balance at the end of Mar /start April iirc - and they set it at around one months credit - not zero iirc)

So based on your £240 - and £185 average - thats c 6x£55pm - so £330 pm in credit - not just over £150.  So suggesting the DD was hiked to cover maybe £200 debit at some point in the cycle.   

And remember the target they are aiming for is likely one month average - so £185 positive not zero at end of March - based on the two above (one says 1 month, the other iirc 5 weeks)

Ignore Annual - they are likely looking at winter only

Secondly the annual average is likely irrelevant against your use between now and their Mar 2026 I assume target - you need to look at the winter average or better total - always higher for most using billed energy for heating.

With duel fuel - think about winter vs summer costs in absence of heating - maybe say 2-to-1 - so £185 = could potentially be £120 min summer for 2-3 months £250 max winter for 2-3m- with electric only possibly closer to 3 to 1 if not even worse.

And yet again vs summer low bills - your only £150 in credit after 6 typically summer months - 6x(£240-£120) summer say - suggests £720 build up - at above hypothetical split - so more like -£500 start point.

So look at last years bills - in pounds if you must then add £185/160 factor - but better to do in raw kWh and using current unit rates - and split across summer and winter.

Take last Nov, Dec, Jan, Feb and Mar use - in kWh x current rates + standing charges - and work out the cost.

Then you can get your own projected balance - so starting with the £150 credit if bills / accounts up to date - for end of Mar 2026

£150 + projected winter costs to end of Mar - say 5 remaining * £240 current DD.

If that number is less than your "average £185"- then the £240 isnt enough.

The fact they want to lift to just £270 - suggests around a £150-£180 undershoot for 5 months of payment.

Which should then drop out of next years figures - having dragged the bill credit cycle up to the minimum.

Unhappy with the Correction to Curve

Many here are "unhappy" with the move away from part -ve balances in the annual cycle - and there are options.

But be warned - other firms have adopted the "always in credit" credit cycle for annualised DD - following issues around debt - Ofgem are more than sympathetic / if not actually positively encouraging it.  My own EOn Next included iirc for all new customers at least.

If your currently in credit - you could of course switch to another supplier.

And IF you can self budget and IF you can afford higher winter bills - prepay is the cheapest cap currently for many - and some firms allow monthly variable direct debit - or own named versions - where you settle in full every month.  But that of course means in my hypothetical split - being able to find £250 in winter - vs £120 in summer - to get an average around the £185 mark.  Easy for some if have savings already - less so if no or little reserves / savings and on fixed (say pensions or benefit income)

Reason to accept some credit on account

For that you save over £120 at cap TDCV vs payment on bill / standard credit.   And hopefully reduce other debt costs adding onto the cap itself in future / even further supplier failures in the limit (given another c£0.3bn was added on to supplier debt figures in last quarterly update).

At todays c4% savings rates - they would have to be holding onto c£3000 average credit - for you to lose on the deal - higher users even more so. IIRC Q3 last year the average Ofgem Customer Credit Balance was around £220-£230 iirc - so lost interest equivalent to £10 - one month of savings vs standard credit.

MWT

Scot_39 said:

Unhappy with the Correction to Curve

Many here are "unhappy" with the move away from part -ve balances in the annual cycle - and there are options.

But be warned - other firms have adopted the "always in credit" credit cycle for annualised DD - following issues around debt - Ofgem are more than sympathetic / if not actually positively encouraging it.  

It is more like Ofgem are enforcing it...

With the liquidity/customer that they are requiring the suppliers to maintain, it rapidly becomes unsustainable if they don't revise the curves to keep accounts at the very least positive, and better if the balance covers at least one payment at all times.

I will not be surprised if the availability of MVDD as a payment option declines. 

Ectophile

slynn0493 said:

They then hit me with a threat that if my account went in to debit they would share information with credit reference agencies, which I found disgusting. 

It depends on what they actually put.  I ended up slightly in debt to my gas supplier last spring (I'm a bit in credit now).  And that appeared whenever I did a credit check.

It didn't do anything to stop me getting a new credit card.  The amount of debt was pretty small, and I was making the payments every month.  It's only if you fail to make a payment that it shows up as a problem in the credit report.