What is the etiquette for debit or credit on energy bills now?

mavql

For my whole adult life, I've been paying energy bills on a monthly fixed DD. I alternate throughout the year being in credit for some of the summer and being in debt for part of the winter. It's never been an issue, it's always balanced out over the year and is never more than a couple of hundred pounds either way.

Now though, I'm with octopus and they keep upping my DD. They're now saying, despite me having almost £300 credit, I need to increase it to ensure I have at least £500 to avoid being in debt over the winter. Is this a requirement to avoid being in debt? I thought the point of it being a credit account was that I could be in debt without worrying about it for some of the year.

I'm a little bit miffed that my bills have suddenly jumped by £70pm (fixed deal ended) and they want to hold £500 of my money in their account for the next few months.

Am I within my rights to refuse and to go into debt instead?

Isthisforreal99

What makes you think you can go into debt with an energy bill? It's not a credit account as you seem to think.

'Almost £300' in credit is nothing at this point in the year. If you have just come off a fix your bills are now going to be higher, have you taken a new fix?

Your only other option is to opt to pay your monthly bills as and when tbey arise but for those that like to budget on a set amount that has it's downfalls as you may find after a very cold month having to find double your usual payment.

QrizB

I thought the point of it being a credit account was that I could be in debt without worrying about it for some of the year.

Octopus's terms and conditions are fairly clear.

https://octopus.energy/quote/terms-and-conditions/

Section 8.3 / 8.3.1:

When paying by direct debit ...you should keep your account in credit and we will track and carry the balance forward to the next month's Statement of Account

So your account should remain in credit at all times, even during the winter months.

Most of the other suppliers have similar terms in their T&C.

RavingMad

Quick Google search brings up an article by The Independent saying only 3 in ten households have £300 credit with typical bill payers holding between £51 and £100

https://www.independent.co.uk/news/uk/home-news/ofgem-price-cap-energy-bill-support-debt-b3070628.html

I'm sure energy companies would love people to be in lots of credit but the reality is different.

My philosophy is as long as you start building credit by Q2 then happy days

Swipe

Your only other option is to opt to pay your monthly bills as and when tbey arise but for those that like to budget on a set amount that has it's downfalls as you may find after a very cold month having to find double your usual payment.

If the rules are you now have to stay in credit even during the winter months on fixed DD, then just pay the new amount they are requesting per month into a savings account and switch to variable direct debit. How does that have any downfalls?

Scot_39

https://forums.moneysavingexpert.com/discussion/6687608/what-is-the-etiquette-for-debit-or-credit-on-energy-bills-now

Octopus - as many others - now have a policy of zero debit. And are very open about how that works in their FAQs and blogs - as in order to do that - they now map the annual balance on the account to approximately one month in credit based at the start of April iirc (Ovo/Octopus are close and get the two confused - one is 5 wks the other a month one end Mar, other start Apr iirc) - so that when April use billed - the account is still in credit essentially.

If you use a lot more energy in winter that could easily be 2 or 3x a simple /12 DD level now.

They will be looking at your forecast spend - and saying your not going to make that Apr 1 month target and so below their target annual balance profile - and increasing the DD by a 12th of the shortfall (they at least give the full 12m - not convinced likes of Ovo always have) - so your on their curve next Oct - the excess will drop out - and a simple annual/12 DD payment should make the target in spring 28.

The days of being in debit have long since gone on annualized DD plans at at least some of the suppliers - many have no debit at any time conditions on all of there accounts. Despite a recent ML show showing the old debit credit cycle charts.

Monthly variable DD is away around that - but it's a bad time to start - if money is tight. Which many gloss over when telling people to switch to. As you will face higher winter bills immediately - more than the annualised DD - without time to bank savings over summer low months to cover winter bills.

Spring - April time arguably a better time for some to switch - you save the amount you under pay vs a simple/12 over lower summer months - and then withdraw to pay the excess above a simple /12 to pay the excess.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82176256#Comment_82176256

Because some people are incapable of budgeting properly and won't put the money aside, or don't understand the difference between FDD and VDD.

In this example the op thinks their energy account is like a bank account and can go overdrawn.

Swipe

https://forums.moneysavingexpert.com/discussion/comment/82176320#Comment_82176320

It's fairly unlikely that anyone incapable of budgeting or had no clue what it was would go out of their way to contact their supplier and switch to monthly variable direct debit. In this example, the OP just wasn't aware of the recent changes and assumed that it still worked like it always did.

t0rt0ise

https://forums.moneysavingexpert.com/discussion/comment/82176320#Comment_82176320

No, they aren't treating their energy account like a bank account. Some forget and others never knew that when the fixed direct debit system came in it was advertised as a good way of spreading the annual cost over the year, and it was explained that we would sometimes be in debt and sometimes be in credit but over the year it would all work out. Now, without any real notice or explanation the industry has changed the rules and expect people to be in credit throughout the year. Nobody can be blamed or criticised for not knowing or for not being happy with the system changing midflow.

Scot_39

Arguably the industry didnt change the rules the govt via its regulator did - advising repeatedly about NOT allowing debt on accounts to build.

When that became no debt at all - is debatable - but certainly it's been in T&Cs for a couple of years now at some for at least some payment methods - like MVDD.

In part a direct result of by Ofgem measures of £4.8bn debt, which UK energy (the trade spokesgroup) estimated now far more - at around £6bn at end Q2 2026.

An amount that adds around £71 pa to DF DD cap according to Ofgem - around 4%.

What_time_is_it

Etiquette schmetiquette.

Stick to the rules as laid out by your supplier but pay the minimum monthly direct debit allowable. If you are in financial difficulty and cannot afford this, call your supplier to discuss what options are available.