Increase to Direct Debit - new way of calculating Direct Debit amount?

Went onto a fixed rate in February, my account is over £230 in credit and got email today to say they are putting my payment up £24 a month! Why?

All the time I was on the variable rate I have always been at least £200-£300 in credit and never increased, now I’m not paying enough.  Not good enough. 

Been with OVO for years, when fixed rate up will be leaving.

I agree, our DD has just been hoisted from £178 to £201 despite us having been £300-£500 in credit since I can remember. This was done without any warning and there seems to be no way of reducing it. Particularly as we are going into summer I imagine we will be £1000 in credit by the Autumn. I did a quick check and our bills average out at about £160 a month over the last year. My assumption is they use customers’ credit as an interest free loan. Is this now common practice for energy companies?

Same here. I know you’ll get the stock answer which includes this:

“

Why is my Direct Debit increasing when my balance is in credit?

 

It’s normal for a credit balance to build up in your energy account over summer, when energy use is usually lower. This credit can help pay for your energy in winter, when most homes use more. It helps you spread your energy costs over time. 

 

Even if your energy account is in credit, sometimes your Direct Debit payments still need to increase.

 

This could be the case if we’ve worked out that your OVO account is likely to have a debt balance long term – based on how much energy your home is predicted to use. 

“

...but this is preposterous. I’m using the same energy as last year (slightly less), I have a credit despite it being before summer, and the price cap is coming down in July. So how exactly has OVO worked out that we’re “likely” to have  a debt balance? Why can’t we see this calculation?

At least they used to pay interest when your account was continuously in credit but I don’t really like giving an energy company an interest free loan!

I agree, they are using our money to subsidise all the people who can’t/won’t pay their bills, so their profits are not affected.

I was emailed today "The aim is to make sure you have credit for 1 month's payment in your OVO account by 31 March 2026"  They've also said "This is to help cover any change in your home energy use over the course of the year." Doesn't everyone have a change in energy use over the seasons?  I've always presumed with direct debit payments I'd be ahead approximately half the year, and behind half the year, with it breaking even over 12 months - apparently not. OVO's aim for everyone to be a month ahead in March, before the cheaper months, ensures customers will be in credit most if not all year, so to maximise their profits would have been a more honest explanation.

Never mind, it's prompted me to check, and I'm moving to a cheaper deal with another company.

On the Direct Debit Calculator page, you can see the effect of changing the DD amount on the final balance. Clicking Continue will take you to a page with the recommendation and an expando that explains how the amount is arrived at. It’s not completely transparent, because the estimate of future energy costs takes the projected cost for a whole year, then deducts a seasonally-adjusted amount for the period since 1 April. The whole-year cost is easy enough: unit rate x FAC + standing charge. The deduction needs knowledge of the seasonal weightings … The ‘credit for one month’s payment’ is calculated as 1/12 of the whole-year cost.

It’s been the custom in recent years for the calculator to use next quarter’s rates for next quarter onwards once they’ve been published, so ‘the price cap is coming down in July’ is taken into account. 

While it will seem reasonable to many customers to aim for a small amount of credit at the end of term, the explanation that this is ‘to help cover any change in your home energy use over the course of the year’ is questionable. Domestic energy consumption has been falling consistently each year for the past decade or two, so that should if anything trigger a reduction in the DD amount. 

The days are gone when a DD customer could slide into debt during the winter so long as it was balanced out during the summer. Debit balances have not been allowed for the past few years; see what the T&Cs say. 

I would have to disagree that debit balances have not been allowed, I have had debit balances which I catch up with in the summer. It does seem however OVO are pushing for accounts to have at least a month's credit... so it's probably a relief to them I'm leaving 😆 

OVO clearly does not understand people's frustration. People are most likely to have a low or debit balance at the end of the Winter season, and OVO have chosen March as the month that everyone must have a months credit. This is highly likely to build over the late spring and summer season when bills are frequently less than the monthly direct debit. Why should customers be okay with having hundreds of pounds held by OVO, with no payment of interest, when in the current financial climate so many are struggling, and paying high interest rates on any debt they have? 

There is the option to raise a complaint if you are unhappy with the changes that have been made ​@PGilbert.

This topic explains more about the complaint procedure:
 

Hope this helps.