[Finance] Paying energy bills by direct debit - scam?

[Harry Wilson's tackle]

I have a smart meter and am with Ovo energy, having switched a year ago using the advice of Martin Lewis.

I just checked my latest bill. An amount was taken by direct debit. The result is that my starting balance has fallen by ten quid.....

....Instead of being £490 in credit, I am now £500 in credit.

Wondering what the actual f***, I just gave them a call. After taking another couple of hundred quid off me by direct debit I am now in fact £670 in credit.

The explanation is that this estimate is based on my last year's usage (before I was with Ovo) and uses an algorithm. They kindly offered to give me £500 refund.

I had no idea this sort of tomfoolery takes place. Luckily I can afford to pay my bills, but I wonder how many other people are being ripped off like this?

The reason I use Martin Lewis' site for bills is because ten years ago I found that because I simply renewed my home insurance each year with the same insurer, without paying any great attention to the charge, the insurer took the liberty of cranking up the charge every year. Chatting to a neighbour I discovered I was paying more than £1,000 a year more than him. I called my insurer and they offered to lower the charge by £600. I mean, what the actual f***? I went elsewhere and saved another £300 on top of that. There ought to be laws against this sort of thing. I may be a bit odd, but I'm not exactly in the vulnerable and elderly bracket. I wonder how many people are being ripped off?

Check your direct debits, folks!

 

[marcos3263]

Im with OVO and exactly the same thing. I am £411.40 in credit. I was over £600 in credit and they upped the direct debit. It very very difficult to reduce the DD. so I did a temp 3 month "I need help with my bills" thing that dropped the DD to eat into some of this credit.

While I appreciate they don't want to go under, I don't want hundreds of my pounds propping up their company.

 

[KZNSeagull]

I don't trust any of them with a monthly DD after bad experiences with NPower. I just pay the bill monthly when it arrives, it may cost a bit more but at least I know that they cannot get their hands on more of my money than they actually need.

 

[Brian Potter]

I am with Octopus. Similar situation where I found myself a couple of hundred in credit. With Octopus it was an easy fix, just went into the app and amended the DD amount. Took it down to half what I was paying which still left a bit in credit in case of emergencies.

 

[dazzer6666]

I have a smart meter and am with Ovo energy, having switched a year ago using the advice of Martin Lewis.

I just checked my latest bill. An amount was taken by direct debit. The result is that my starting balance has fallen by ten quid.....

....Instead of being £490 in credit, I am now £500 in credit.

Wondering what the actual f***, I just gave them a call. After taking another couple of hundred quid off me by direct debit I am now in fact £670 in credit.

The explanation is that this estimate is based on my last year's usage (before I was with Ovo) and uses an algorithm. They kindly offered to give me £500 refund.

I had no idea this sort of tomfoolery takes place. Luckily I can afford to pay my bills, but I wonder how many other people are being ripped off like this?

The reason I use Martin Lewis' site for bills is because ten years ago I found that because I simply renewed my home insurance each year with the same insurer, without paying any great attention to the charge, the insurer took the liberty of cranking up the charge every year. Chatting to a neighbour I discovered I was paying more than £1,000 a year more than him. I called my insurer and they offered to lower the charge by £600. I mean, what the actual f***? I went elsewhere and saved another £300 on top of that. There ought to be laws against this sort of thing. I may be a bit odd, but I'm not exactly in the vulnerable and elderly bracket. I wonder how many people are being ripped off?

Check your direct debits, folks!

Essentially all they are trying to do is smooth your payments so they stay the same throughout the year - build up a credit balance through the summer then use it up during the winter. Huge price movements have buggered up their algos to quite a degree though so people will end up paying monthly amounts that might be some way off their annual average cost/12, resulting in accounts hugely in credit or requiring big monthly payments.

Insurance is different - companies rely on customer inertia, the ‘auto renewal’ option sounds attractive because you have no hassle and won’t forget to do it but it means they can keep nudging the price up. Always get new quotes pre-renewal, will usually be cheaper (then the scamming bastards at your existing company will try to keep you by matching whatever quote you’ve had). Exactly the same with car insurance.

 

[Papak]

Nobody is getting ripped off in the long term. What is frustrating is that energy companies don't share meter readings or trust the consumer to provide accurate 12-24 month historical consumption which would remove the vast majority of the issues reported by the OP.

The number of times I see internet posts about how much my DD is is ridiculous it just like me saying how much it costs to fill my car with fuel without telling you the cost of the fuel or the size of my fuel tank!

Back in the day (10+ years ago) energy companies made a nice "side hustle" not from OnlyFans but from investing the excess paid by millions of customers.

When interest rates went very low I'm fairly sure they tried their best to get the reserves built up even highter to claw back some of the lost revenue.

 

[arewethereyet?]

I can’t believe you hadn’t realised this, there’s so much press about being savvy and shopping around and not just renewing with your current provider, if it be insurance, utilities (except water) there are good deals around to be had.

 

[Thunder Bolt]

I'm with Shell Energy for electricity and they reduced my direct debit by £66 temporarily whilst the government payment is being paid. My monthly payment has also gone down.
I can input my own readings (I wouldn't touch a smart meter with a barge pole), and alter the DD amount on their website.

My advice is to ring up, ask for your credit balance to be repaid, and then pay monthly yourself. Cancel your direct debit.
The company has also broken the Direct Debit code by not giving you 10 working days notice of a change in your payment.

 

[Si Gull]

Essentially all they are trying to do is smooth your payments so they stay the same throughout the year - build up a credit balance through the summer then use it up during the winter. Huge price movements have buggered up their algos to quite a degree though so people will end up paying monthly amounts that might be some way off their annual average cost/12, resulting in accounts hugely in credit or requiring big monthly payments.

Insurance is different - companies rely on customer inertia, the ‘auto renewal’ option sounds attractive because you have no hassle and won’t forget to do it but it means they can keep nudging the price up. Always get new quotes pre-renewal, will usually be cheaper (then the scamming bastards at your existing company will try to keep you by matching whatever quote you’ve had). Exactly the same with car insurance.

Never go the auto renew route but make sure you renew with someone... don't forget like I did with car insurance Luckily, Thames valley police were very understanding

 

[LamieRobertson]

I can’t believe you hadn’t realised this, there’s so much press about being savvy and shopping around and not just renewing with your current provider, if it be insurance, utilities (except water) there are good deals around to be had.

Not sure there are ‘deals’ to be had with energy suppliers currently …I note the OP had a happy ending (lucky chap) ..I’m with OVO and have at least found their customer service to be very good and at least open to negotiation

 

[Springal]

Not sure it’s a ‘scam’ really…. Personally I’d rather pay the same amount (as I do now) all year round and have credit that’s used over winter, than varying amounts each month.

If I think there to much built up I just withdraw some

 

[LamieRobertson]

I'm with Shell Energy for electricity and they reduced my direct debit by £66 temporarily whilst the government payment is being paid. My monthly payment has also gone down.
I can input my own readings (I wouldn't touch a smart meter with a barge pole), and alter the DD amount on their website.

My advice is to ring up, ask for your credit balance to be repaid, and then pay monthly yourself. Cancel your direct debit.
The company has also broken the Direct Debit code by not giving you 10 working days notice of a change in your payment.

Like you I am a bit reticent over having a smart meter installed

Re the DD I’m not sure the OP is saying he didn’t get the necessary notice …be interesting to find out if you are right

 

[Arthritic Toe]

I was with one of the small suppliers that went under a couple of years ago. Went they went down, all their records went with them and they basically had no idea of peoples balances (although they kept this fact hidden). When Octopus took them over, they sent out an 'initial balance estimate' (basically a guess) of 50 quid that you could either accept, or appeal - supplying supporting evidence if you had it. I called them and said that I was pretty sure that my balance was about 200 in credit, but I didnt have any evidence. They then sent another 'estimate' for 200 quid, again with the opportunity to accept or appeal. I accepted that as it was about right, but I've often wondered if I'd just said my balance was 2 grand whether they would have just accepted that

 

[GT49er]

I was told they paid interest on the credit. I phoned OVO and they confirmed it. Higher rate than my ISA too.

 

[The Antikythera Mechanism]

Nuclear fusion – live: Scientists to reveal 'limitless clean energy' breakthrough​

Follow live updates as scientists are poised to announce a major breakthrough that it is thought could lead to "basically unlimited" carbon-free energy

Sky News


12:09

Scientists due to reveal 'holy grail' scientific breakthrough​

In a news conference scheduled for around 3pm UK time, the US Department of Energy is set to announce a "major scientific breakthrough" at the Lawrence Livermore National Laboratory in California.
It is one of several sites worldwide where researchers have been trying to develop the possibility of harnessing near-limitless energy from nuclear fusion.
Excitement around the announcement is based on the fact that it is a technology that has the potential to one day accelerate the planet's shift away from fossil fuels, which are the major contributors to climate change.
Developments to date with the technology have repeatedly been beset by daunting challenges.
However, it is believed that today's revelations could signal a seminal shift in the move towards what scientists have described as a "holy grail" of carbon free power.

 

[Papak]

Not sure there are ‘deals’ to be had with energy suppliers currently …I note the OP had a happy ending (lucky chap) ..I’m with OVO and have at least found their customer service to be very good and at least open to negotiation

100% this on energy, we are all pretty much in the same situation except those who are on fixed rate deals which will probably all expire within 12 months from now.

 

[Arthur]

My DD goes out monthly but my bill is quarterly so whilst I have ~£500 credit now I know that is going to be wiped out next time they bill me. To be fair to them my monthly DD that has risen quite substantially is pretty close to what I pay quarterly.

 

[Mellor 3 Ward 4]

(I wouldn't touch a smart meter with a barge pole),

Can I ask why please? I find ours incredibly useful.

 

[Mellor 3 Ward 4]

I'm with Shell Energy for electricity and they reduced my direct debit by £66 temporarily whilst the government payment is being paid. My monthly payment has also gone down.
I can input my own readings (I wouldn't touch a smart meter with a barge pole), and alter the DD amount on their website.

My advice is to ring up, ask for your credit balance to be repaid, and then pay monthly yourself. Cancel your direct debit.
The company has also broken the Direct Debit code by not giving you 10 working days notice of a change in your payment.

I'm with Shell too - and yes I'm in credit - but the way the winter is going I'd rather have a bit of credit built up - come the Spring if I'm still in credit then I'll get some paid back.

 

[Guinness Boy]

Insurance is different - companies rely on customer inertia, the ‘auto renewal’ option sounds attractive because you have no hassle and won’t forget to do it but it means they can keep nudging the price up. Always get new quotes pre-renewal, will usually be cheaper (then the scamming bastards at your existing company will try to keep you by matching whatever quote you’ve had). Exactly the same with car insurance.

They can no longer charge existing customers more than new ones.

https://www.moneysavingexpert.com/news/2021/05/-insurers-banned-charging-existing-customers-more--new--loyalty-/

My advice would be if you have not had a claim to compare your renewal premium with a brand new quote and with other companies on one of the comparison sites. If you have had a claim then you will pay at the same basic rating as a new customer but will not have a no claims discount (or you'll have an additional risk premium component) so it will be (legally) more.