OVO Direct Debit Increase

Scot_39

https://forums.moneysavingexpert.com/discussion/comment/81900633#Comment_81900633

No MVDD - the V = Variable - means you pay the exact amount used that month - if that involves heating - normally substantially higher in winter than summer.

MY winter bills - low-medium user - well sub median TDCV - but still expensive heating as all electric can be 2.5-3x my lowest summer bill.

MVDD doesnt suit those who may for instance have fixed low income and/or low savings. So it is not ideal for everyone.

I dont understand the £2880 in realtion to the £324 at the moment - and both suggest your quite a high user (at 50% above median duel fuel tdcv cap - or double the electric profile class 2 median tdcv cap).

Think very carefully before you cancel your DD - you will end up on standard credit - and pay 7% more - and have highly seasonal bills as well. No yearly averaging winter to summer. And dont Ovo charge £20 for paper billing too.

As to Ovo - their 1 month by Mar policy been discussed here over last year plus iirc. There are a couple of forumites here who have been on it - who hopefully will comment in more detail. IIRC in the first year - they allowed at least existing customers more than a year - but the last I heard one user was still waiting for them to modify the policy to see if would add another year to get their in the end.

IMO - Unless there were issues with estimated bills etc or abnormally recently high costs (are you a high electricity user - rates went up c5% in Jan cap for instance ) - I think maybe you and certainly Ovo have should have spotted this earlier - to give more time to drag your balance profile up

https://forums.moneysavingexpert.com/discussion/comment/81900740#Comment_81900740

See here for a description of one variant of the Mar 1 month requirement

https://forum.ovoenergy.com/understanding-bills-payments-172/how-does-ovo-energy-calculate-my-direct-debit-10410/

Ovo are not the only ones doing this - Octopus explicitly do too - they are - or were at one stage recently looking at 5 weeks at start of Apr - the end of high winter bills for many. So not below zero before April payment after April use iirc. But they actually explicitly say they allow a full 12m to make up any shortfall to their annual balance profile.

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

And many others have similar minimum balance conditions.

The days of sometimes in debit sometimes in credit on annualised DD plans (nominally "fixed" DD of annual cost /12 - but costs are still very volatile - as are govt policy costs - so the annual changes all the time - with rates or consumption - so not "fixed" annually at all these days ) - are long since gone.

gpman

^^^^

Whilst not part of the terms & conditions (so does not really address the question of the OP as to whether OVO can enforce this), it does explain the policy that the OP is aware of a little more clearly.

" The aim is to make sure you have credit for 1 month’s payment in your OVO account by the end of March. This is to help cover any change in your home energy use over the course of the year. 

 For new customers, this only comes into effect once you’ve reached March. When you first join, the aim is to make sure you have no balance left to pay after 1 year."

So that makes the OVO stance even more difficult to understand based upon the numbers the OP provided. (or otherwise questions how the OP is where they are today)

I really hope the OP gets a full explanation from Ovo and posts it here. The OP is entitled to a full explanation from their supplier. (I'm happy to dig out the source for that assertion if needed, but hopefully Ovo will just provide the explanation)

Edit: Whilst searching for something else, I stumbled across the relevant source. SLC 27.4.

Scot_39

What the OP needs to know is whether his past payments and use - if accurately recorded and billed - justify the new demand.

As I am not clear we yet understand their figures - or the reason for this "new" Ovo demand.

The full details of the DD calculaton don't IMO have to be in the T&Cs.

But for instance - what is in their current certainly domestic T&Cs in section 7.11

https://www.ovoenergy.com/terms#7-paying-us/

"account in credit - you’ll keep your energy account in credit by paying for the supply in advance;"

I suspect thats not one of the recent changes. Given they were one of the first who once offered to scrap MVDD (c2018 according to google - as generally means customers paying after use)

If your not 1 month in credit at end of Mar - after winter - its perhaps not unreasonable to argue your likely to be at risk of being in debit by the end of it.

gpman

Irrespective of what Ovo may claim is their policy, or indeed what their terms and conditions may say, the question posed by the OP was can Ovo enforce this?

I think I have the answer now (almost), unless someone has more up to date information.

on 02 February 2023, Ofgem issued the following decision:

Direct Debit Market Compliance Review: Progress Update

of particular note:

"The balance of each consumers energy account also plays a role in the level of any Direct Debit. Where a consumer is in a credit position, we expect suppliers to reduce the associated Direct Debit level with the intention of returning the account as close to a zero balance over the next 12 months. Similarly, where a consumer account is in a debit position, suppliers commonly add this amount on to the Direct Debit amount and smooth the cost over the next 12 months."

and so the logical question that remains is over what review periods? Or how frequently?

Well the Ofgem decision also says:

"Direct Debits are forecasted over a 12-month period, but industry price cap levels now change on a quarterly basis. We expect suppliers to recognise this and to carry out regular adequacy reviews. This means that as the cost of energy falls, consumers should see this reflected in their Direct Debit level sooner. Alternatively, as the cost of energy increases, we anticipate that Direct Debit levels will also increase."

Whilst not giving an entirely clear answer, logic would suggest a quarterly review (but not necessarily aligned exactly to the price cap periods). I know, for example, that EDF reviews the level of customer DDs every quarter.

Ovo (or any other supplier) may attempt to make a case that those on a fixed rate contract could have a reduced frequency of adequacy review. This would be debateable, as the adequacy review also should take into account the customers usage. However I suspect having different review periods dependant on the tariff the customer is supplied on is an unnecessary complication. EDF just make adequacy reviews every 3 months.

StingyBuyer

Im at £324 as every quarter they review it and change my direct debit. That my main beef. They reduce it right down in the summer months. Ive asked them to keep it the same all year but they automatically write to you and change it.

Im on a smart meter so all reading up to date.

gpman

https://forums.moneysavingexpert.com/discussion/comment/81901702#Comment_81901702

Take control.

Don't allow your supplier to reduce your monthly payment if you think it will result in putting you into a debt situation when extrapolated to 12 months. Then you shouldn't get 'catch up' demands in winter months. If you do, then challenge that too.

You may want to remind them of their obligations as per SLC 27.15, and if they simply reply that they are doing so, then invoke SLC 27.14

Sadly, the issue you now describe is not unique to Ovo.

luci

https://forums.moneysavingexpert.com/discussion/comment/81901702#Comment_81901702

It sounds like you're on a MVDD when you want to by what used to be called a "budget" DD. The normal DD set up with any supplier is the same DD every month, which is what you want. You need to ask them why they keep changing yours to MVDD.

I would also check your actual usage over the past 12 months. Get the readings from 12 months ago from your statement and subtract it from this month's readings. That will give you your accurate usage. Divide that by 12 months, which should give you your monthly usage. If you post the figures on here, someone will be able to tell you what your DD should be.

gpman

https://forums.moneysavingexpert.com/discussion/comment/81901786#Comment_81901786

I don't believe Ovo allow payment by MVDD.

This is a change to a budget DD based upon a quarterly review.

@StingyBuyer

Don't be mistaken into believing your supplier, just because they are using accurate regular readings from your smart meter, have not messed up your assumed annual usage figures.

I now someone who has had a smart meter for the last 9 months, yet their supplier is currently estimating their EAC at about 100 times more than what they were advised (and what the last 9 months meter readings support) and about 10 times their AQ more than what they were advised (and what the last 9 months meter readings support).

Swipe

https://forums.moneysavingexpert.com/discussion/comment/81901822#Comment_81901822

Indeed. My EAC is still 10K more than my actual usage due to a mess up by E.ON Next who added my old mechanical meter back to my account and the national database, 3 years after it was removed by EDF. I was assured it had all been been updated and set as inactive again 12 months ago but the erroneous EAC is still persistent to this day. I have no choice but to pay by MVDD or my supplier is requesting more than double what it should be under fixed DD.

gpman

https://forums.moneysavingexpert.com/discussion/comment/81901953#Comment_81901953

Raise a complaint based upon the inaccuracy of the EAC. SLC 27.15 is a good starting point.

My experience of EDF in such situations is that they will fully accept they are in the wrong … but won't know how to actually resolve it. It can be resolved, they just do not know how.

Sounds like you have already taken the option to mitigate the effect of their mistake.