Big hikes in direct debit payments - EON

johnsm13 · 3 November 2011 at 2:10PM

I wonder how many other people are having problems with this at the moment - the EON helpline person I spoke to said he had been specially recruited to try to reduce telephone waiting times for people calling about big increases in their direct debit payments.

I've been with EON since August 2010 with no problems.

Yesterday I submitted meter readings which generated a new electricity and gas statement showing a debit of £58.18. Not too bad I thought.

But it also generated one of those "We'd like to change your monthly direct debt to..." notices. In this case, from £115/month to £168/month - a 46% increase. Bit steep I thought.

Then I looked at page 4 of the statement which details how much EON estimates I will spend in the next 12 months, based on past usage. That forecast a total annual spend of £1330, ie an average of £111/month. In other words, less even than my current direct debit, and a lot less than the £168 EON would like to start relieving me of.

Having spent a total of two hours trying to get through to EON yesterday and today, here's what I think the confused-sounding temp from the company was saying...

Traditionally direct debits work on the assumption that customers will be in arrears at the end of the high-usage winter period (say by the time next April comes round). That debt then gets worked off as you pay the same monthly amount over the low-usage summer period.

What I think the EON representative was telling me... was that they have now turned traditional thinking on its head, by aiming for zero balances by April. Which means customers build up big surplusses over the summer, rather than pay off their debt.

Hence the massive rise in my direct debit.

Please could I ask the EON folk that frequent these pages if that sounds at all right? If so, it sounds like a significant change in approach to how direct debits function.

I can't afford such a big leap in my monthly payment - unwarranted by changes to my demand patterns - so I have been forced to switch to "on demand" payment, ie paying off each quarterly bill as it arrives. Yes, the tariff's higher - but, again, I can't afford an immediate 46% jump in energy costs.

Do the energy companies really want to drive customers back to on demand payment? I just don't get it.

Mike Johnson

E.ON_Company_Representative:_Helena · 3 November 2011 at 2:30PM

Hi Mike,

I thought I would pop on to give you a bit of general DD info.

The idea is that you pay an amount each month, you should build up a credit balance over the summer months as this will then go towards your larger winter bills.

We also aim for a zero balance in spring, so this then allows us to calculate the Direct Debit for the coming 12 months. This will be calculated on your previous usage.

Also at the spring review we will refund any credit you have over £5.

At this time of year, your account should have a credit balance to help with the higher winter bills.

I will be more than happy to check your account specifically for you if you would like me to, just to make sure nothing has gone wrong.

Just email me at WebForumAdvisors@eonenergy.com.

Thanks

Helena

johnsm13 · 3 November 2011 at 2:41PM

Thanks for such a speedy reply Helena. I will contact you directly.

I still really think this is very difficult to explain to customers (and the EON person I spoke to certainly struggled).

What is the point putting a forecast on a statement that I will use the equivalent of £1330 gas and electricity over the next year, then fixing a direct debit that would mean the payment of £2016 (12 x 168)? Why not just divide £1330 - the forecast - by 12?

Mike

E.ON_Company_Representative:_Helena · 3 November 2011 at 2:45PM

johnsm13 wrote: »

Thanks for such a speedy reply Helena. I will contact you directly.

I still really think this is very difficult to explain to customers (and the EON person I spoke to certainly struggled).

What is the point putting a forecast on a statement that I will use the equivalent of £1330 gas and electricity over the next year, then fixing a direct debit that would mean the payment of £2016 (12 x 168)? Why not just divide £1330 - the forecast - by 12?

Mike

Brill,

If you email your account number or address, I can get on to it right away.

Helena

DirectDebacle · 3 November 2011 at 3:00PM

Just a few of the threads by Eon customers experiencing similar problems:

http://forums.moneysavingexpert.com/showthread.php?t=3531893&highlight=

http://forums.moneysavingexpert.com/showthread.php?t=3573373&highlight=

http://forums.moneysavingexpert.com/showthread.php?t=3578607

http://forums.moneysavingexpert.com/showthread.php?t=2861072

http://forums.moneysavingexpert.com/showthread.php?t=2262031

Have a read and if you feel their DD policy was never properly explained to you at the time you joined them, insist the DD is set to 1/12th of annual usage per month from the date you joined to the correct anniversary date, which will be August not 'spring'.

If they refuse complain in writing and also pass a copy of the complaint to Consumer Focus.

Please let us know how you get on.

jalexa · 3 November 2011 at 3:22PM

johnsm13 wrote: »

I've been with EON since August 2010 with no problems.

As has just been pointed out this issue has form. Your formal starting point should be to ask your supplier for a calculation in compliance with Standard Licence Condition 27.14. You should request a stay on the increase pending the provision (and agreement) of the calculation. You should make any failure to provide an SLC27.14 compliant explanation a formal complaint.

I don't want to argue the pros and cons of "spring alignment" here, but a slightly different argument. You have been a customer since August 2010 and have therefore already been subject to a spring "annual review". In theory you could have had an "interim" revew after 6 months. The issue is why the last "annual review" (April/May 2011) apparently has failed to set an accurate monthly payment sufficent to deliver a zero account balance by the following "annual review" (April/May 2012). In my opinion, if you are blameless on that issue, you should not be subject to an excessive short year payment arising from the seasonality of your heating fuel and the supplier's failure to calculate an accurate payment at the previous annual review.

I cannot comment on the accuracy of the calculation without the gas/electric split. Did Eon provide split gas/electric projections? If not you should ask why not. Without that it is impossible to verify the accuracy of the calculation.

johnsm13 · 3 November 2011 at 3:34PM

Blimey, I had a feeling there might be a backstory to all this!

Thanks DirectDebacle for those helpful links. I did key "EON" and "direct debit" into the search box but none of these came up in the first few of the hundreds of pages of results.

Jalexa - yes, EON provided a projection split of £677 for gas and £653 for electricity.

I have now spoken to EON's Helena and agreed a smaller direct debit increase, which is bad news but not such bad news as before.

It seems folks on a zero-balance spring review have to accept they'll be lending their energy supplier big bucks over the summer, rather than working off a winter debt.

DirectDebacle · 3 November 2011 at 4:27PM

Thank you for the update. What concerns me is that it appears that you and the other posters in several threads have been taken completely by surprise by the 'zero spring balance' policy.

Eon have assured us that their policy is correctly explained at the time customers sign up. If that is the case there should be no reason why customers question DD increases on that basis. I suspect that the policy is not correctly explained. When you joined in August last year you should have received a letter from Eon explaining precisely how their DD worked. Do you still have that letter. If so what does it say? It would be helpful if you could post it on here.

If you feel it wasn't clearly explained to you then I would ask that you still bring it to the attention of Consumer Focus (here) who have an interest in this. It matters not that you have now resolved your concerns to your own satisfaction. You were still misled.

If Eon can be persuaded to act like a decent, honest and trustworthy company, that will be of benefit to all their customers. Particularly for those who are less able or astute as you to question their practices.

marshdaisy · 3 November 2011 at 4:36PM

We recently had a similar problem with Eon - they total mischarged us on a bill, which was subsequently credited. But they then decided to up our dd by 80% due to the estimate against the wrong invoice. Eventually managed to speak to someone and pointed out the problem, and I stated I did not give them my authority to change our dd - the rather grumpy operator then told me if I didn't accept the new figures I would have to pay by another method and lose my discount for direct debits! Went a bit higher up the food chain and got my dd kept at the same level but it took a lot of time and stress sorting out plus having to threaten them with taking action under the Direct Debit Guarantee................... Life shouldn't be like this!

david39 · 3 November 2011 at 4:50PM

Had a similar increase AND a change of tariff so did what the Energy Minister suggested and shopped around.
I've got a >£100 saving by moving to NPower.

backfoot · 3 November 2011 at 4:58PM

Good advice from Jalexa and DD above.

I would add:

It looks like you have been caught our by this nonsensical and unfair policy because;

1. They are absorbing a price rise over less than a year.
2. They have factored in the remaining seasonality based on consumption patterns from last year's harsh winter.

Both of these factors are unfairly weighted in Eon's favour and cause the higher than expected DD increases.

By following Direct Debacle's advice to report the matter to Consumer Focus you can prevent this unfair practice from continuing. It is my personal view that it is a clear and inherent breach of the Standard License Conditions.

The backlog of complaints is symptomatic that something is clearly wrong. Eon's continued intransigence is shameful imho,

as are the reports that they threaten to withdraw the discounts.

Big hikes in direct debit payments - EON

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