Power Utilities awash with funds

_Chris_5

In the good old days, I would pay an amount of money that over the course of a year would more or less cover the years gas and electric bills. Back then, you'd build a credit in the summer and go into debit in the winter.

I've found in recent years, that my providers (yeah I've switched once in a while), like to ensure my account is in credit throughout the year, building a hefty credit in the summer and getting down to but not into debit during the winter.

WELL, it seems that there are circa 50 million domestic accounts held by our utilities, but have you considered that if every account is in CREDIT, then the utilities (collectively) are raking in circa £12.5m in interest (3%), PER MONTH!!!!, for every £100 of credit. Imagine during the summer when the accounts left to themselves are a few hundred pounds in credit.

(£100 x 50m accounts x 3%) divided by 12 (months)

Of course, 'they' will say that that money is fed back into system to reduce costs a little. Call me Mr Cynic, but somehow, I don't think any company is that generous.

Peter999_2

If people are concerned about the tiny bit of interest they would lose, switch to use a variable direct debit instead.

I get a bill on the last day of the month and 14 days later Octopus take that exact amount out by direct debit so actually they give me half a month of credit.

Of course, then people will moan when they get large bills in winter. People love to moan.

molerat

Just think how awash with funds they would be if the debtors paid them the £4.79bn owed.

https://uk.finance.yahoo.com/news/energy-debt-reaches-record-4-141647843.html

QrizB

I've found in recent years, that my providers … like to ensure my account is in credit throughout the year,

That's generally the rule. Many suppliers even have it in their T&C that you'll keep your account in credit at all times.

Many (not all) suppliers support monthly variable direct debit (MVDD) where your DD covers the latest month exactly and you never have a positive balance. You should still get DD pricing with MVDD.

Which supplier are you currently with? Someone will know if they offer MVDD and how to switch.

(£100 x 50m accounts x 3%) divided by 12 (months)

There's closer to 25M UK domestic energy accounts. If they were each in credit by £100 that's £2.5bn. However you'll see from molerat's post above that there's almost £5bn in debt so the credit balances only cover half the debit ones; overall, the energy companies are providing credit to the nation, not raking it in with interest.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6673896/power-utilities-awash-with-funds

Dont know how far back you are going to the good old days but certainly in very early 2000s when I worked in a contact centre for a utility company the idea was that you built up credit in summer and eroded it in winter but the aim was to get you to near 0 at the end of winter not in debt. The only time debt should have happened is if someone joined in the middle of winter but then the suggested monthly amount was increased to ensure it was paid off quickly and the normal reserve was built up.

3% interest per month would put the AER at 42.58% - there is no bank account in the UK for corporates, individuals or anyone else thats offering 42.58% interest. Corporates can probably achieve 4-4.5% per year outside of investments and as interest is compound you cant just divide by 12 to get the monthly amount.

Obviously when setting prices companies look at all their revenue generation and all of their expenses, if your cynical then surely you'd believe that if they were cut off from this source of income that another source would be adjusted to maintain the bottom line?

chubsta

I moved from British Gas a few years back as they tried to put my monthly DD up from £65 to £500, despite me being always in credit and no changes to my usage - obviously I was very unhappy with this but when I spoke to them the response was 'its ok, you will get it all back at the end of the year…' - as if I was going to use my utilities account as an interest-free savings account!

Unfortunately I can see how many people will fall for this.

Albermarle

https://forums.moneysavingexpert.com/discussion/6673896/power-utilities-awash-with-funds

then the utilities (collectively) are raking in circa £12.5m in interest (3%), PER MONTH!!!!

Please advise where you can get 3 % interest a month ???

QrizB

https://forums.moneysavingexpert.com/discussion/comment/82053328#Comment_82053328

£12.5M a month is £150M a year.

£150M is 3% of the £5B that would be the represented by 50 million accounts, all in credit by £100, that the OP assumes.

And I don't think the OP is coming back to discuss this; it was their first post since 2010. I suspect they just wanted to vent.

forgotmyname

They cannot be as bad as British Gas when Direct Debits became their preferred option for payments.

My bills would jump up and down even if I supplied meter readings monthly. Too little then far too much
which was not helped by them always managing to time the date of the bill and sending the bill 1 day
before a payment left my account.

But then it jumped to far too much and it was in a fair bit of credit on teh 3rd month, I had enough of it
and knew our bills were fairly stable. Whilst on the phone listening to them saying the computer sets
the DD price and there is nothing they can do. I was working out the average and rounded up the numbers
whilst they kept telling me there was nothing they can do.

Then I said the magic words, OK cancel the direct debits and bill me quarterly. That got action, a miracle
happened and they COULD adjust the Direct Debit values.

EDF almost started to do the same thing, I was about £600 in credit and they sent a letter stating my DD
was going to increase? I contacted them and said no it will not increase and thanks for letting me know
how much credit I have I want most of that back.

sheramber

I didn’t give BG a choice.

They told me my estimated usage and then set the DD to pay double the amount due.

I sebt an email telling them I did not know what school they went to but when I went to school my usage worked out at £X and kindly change the DD to the lower amount.

I check my account regularly and would make any adjustments necessary.

They reduced the DD and my account balanced at the end of my account year.

forgotmyname

I was with them a long time ago when they wanted to switch everyone to Direct Debit so it may have changed
since then but they kept saying the computer sorts the direct debits and they cannot change them and kept
saying it needs to be higher in the summer to balance the winter bills.

In my case the only fix was to tell them to cancel the direct debit and bill me quarterly. Not sure if there were
discounts for DD back then? Cancel was the magic word though, amazing things happen and they could change
the direct debit amount. I left soon after they were a pain to deal with.

Shame I could not do that with the Council and the Job Centre. Why do I keep offering to help people sort
issues with these services? :)