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

Ofgem wrote last year that “Where a consumer is in a credit position, we expect suppliers to reduce the associated Direct Debit level with the intention of returning the account as close to a zero balance [sic] over the next 12 months.” I think that ‘we expect’ in Ofgem-speak has at least as much of a mandatory effect as a guideline, so how does ‘one month’s credit’ conform to ‘close to a zero balance,’ and what happened to the 12 month adjustment period?  

The point still stands, however the information got there, that it’s very patronising.

I also think the “you can request a refund” excuse is misleading. You can only request a refund if you have enough credit to pay one month, right? So as long as Ovo keeps increasing our monthly direct debits they can keep them ahead of any credit we’ve accrued and we never get to withdraw. Is that correct? What am I missing?

I’m really sick of this. I’m going to change provider. Your Which? rating is poor and it’s clear why.

My monthly payments have been increased even though I have been building up enough credit to cover the coming winter months the idea of having to maintain a full month's credit by March 26 is unethical my fixed tariff ends soon and I will be switching as soon as it expires.

Thought I'd do a search of this forum after reviewing my account.

My current balance is a credit of £650. My direct debit is £237 per month, so you can see I have more than the 1 month credit people are talking about.

I requested a credit as my balance is continually going up due to the fact majority of my electricity usage is for my electric car and therefore credited back under the Charge Antime rate of 7p per kwh.

It seems that despite my nett electric bill being below my direct debit, they want to keep the money in their account.

Always been happy with Ovo until this point but at this rate my end of year balance will be over £1k. 

Probably will look at other suppliers now. 

It's like giving Tesco a month's worth of grocery money and picking your goods up later as and when you need them if OVO end up holding on to every customer's 1 month credit how many millions of pounds in their coffers will they be sitting on?I too have been happy with them up till now but this is sharp practice by any standards

Welcome to the OVO Forum ​@loafer.

​@neophlegm ​@loafer ​@Whipster2210 I’m sorry to hear of the dissatisfaction caused by the changes to the calculations, and I can understand why you’re frustrated.

​@neophlegm please bear in mind that the Forum is a place for members to have open discussions that are in line with community guidelines and house rules. Members are, of course, free to discuss any grievances they may have with OVO procedures and policies, however our small team of Moderators can only advise as to what these procedures are. If we post anything quoting or describing OVO policies, we are doing this to give other Forum members visibility of said policies. This is in no way meant to be patronising towards anybody, and it doesn’t mean that members cannot carry on their own discussions.

If you would like to discuss a refund amount of more than is being suggested on your online account or app, you’ll need to speak to our Support Team. As Forum Administrators, we have no visibility of customer accounts, so our Support Team will need to have these sort of conversations with you. At the end of the day, OVO can’t hold onto your money and our Support Team can refund an amount over that suggested on your online account. Please bear in mind however, that a large refund may result in an increase to the Direct Debit depending on the account balance.

Or is it like Tesco delivery asking you to pay for your groceries before they deliver to your home and you consume them?

There is more than one way of looking at most things, and many things that you want to use/consume have to be paid for in advance.

PS. Personally I don't like they way they are doing it, but can see their point.

Maybe it's because I've lived through an age when energy companies seemed to manage well enough by taking meter readings once a quarter and sending a bill through the post to be settled within a week or so that I find this unnecessary plus the suddenness of the announcement and the harsh wording implying there was no consumer choice. Could have been handled better.

Why is OVO Energy trying to double my DD when we have proved mathematically that you have already over estimated previous readings. Are the complaints staff on a bonus to give ridiculous answers and ignore facts. Given that OVO Energy has already been fined £2.4m by the regulator will we get compensation for being over charged?

They have, yet again, changed the way that they calculate the Direct Debits required.

There have alredy been complaints about it.

Personally:
I can see why they have done it, although I can’t say what Ofgem will make of it.
However I definitely don’t agree with the heavy handed way that they are doing it.

The way to avoid estimated readings is to submit them manually at least on the first day of every billing period - or get a smart meter. 

Money you pay by Direct Debit {DD) is credited to your OVO account. It remains yours, but it’s used to defray the charges laid out in your bill. Paying too much just increases the balance on the account - it’s not an overcharge.

When you agree to pay by DD (and benefit from the lower rates this entails), you also agree to keep your account always in credit. As ​@Nukecad pointed out, OVO have recently gone even further, expecting you to have a month’s costs in credit at the end of winter. This will involve a small increase (0.7% of the projected annual cost) in the DD amount. 

One frequent cause of unreasonably high DD demands is in incorrect Future Annual Consumption figures on your account. You can see these on your Plan page. These are adjusted when meter readings are received - another good reason to submit regular readings, or get a smart meter. 

The increase in the annual payment arising from the new policy is one average month’s cost, 1/12 of the total cost for the year. The annual payment is spread over 12 months, so each month’s payment has to increase by 1/12 of 1/12 of the estimated annual cost. 1/12 x 1/12 = 1/144, or about 0.7%.

If you are being asked to pay twice the amount you were paying previously, there is something else involved. I mentioned two factors:

• The requirement to keep the account in credit always (not as it used to be, when accounts sometimes had negative balances in midwinter but positive ones in summer).
• The size of the Future Annual Consumption figure(s) used to calculate the DD amount. Have you checked that they’re reasonable? 

There are other factors, like an increase in the tariff rates. This will only have happened if you have recently come to the end of a fixed-term contract with prices below the ones for your current tariff. 

You can see OVO’s calculation - and do your own - using the online Direct Debit calculator. 

Hey ​@D Manser,

Welcome to the OVO online community, 
 

We have made the change to build one month's usage credit by the end of the winter period on our customers accounts. This credit will help to cover any changes to your energy usage or costs throughout the year leading to a smoother payment journey. Your Direct Debit is managed to ensure that you do not build too much credit on your account and also ensures your account does not fall into arrears should anything change with your usage. If you do build more credit on your account than is needed, we will recommend you reduce your payments or alternatively, you can request a refund at any time Our recommended Direct Debit amount is a suggested amount to ensure you pay for your predicted energy and don't end up with any debt or too much credit by the end of the Winter period. Your energy costs may go up or down throughout the year and we want to support you with those changes. Paying by Direct Debit helps to spread those costs so you don't end up with large bills to pay, and paying by Direct Debit is one of the cheapest ways to pay. 

How we work out your Direct Debit amount

The aim is to make sure you have credit for 1 month’s payment in your OVO account by the end of March. This is to help cover any change in your home energy use over the course of the year. 

For new customers, this only comes into effect once you’ve reached March. When you first join, the aim is to make sure you have no balance left to pay after 1 year.

Your Direct Debit payment amount will be regularly reviewed to make sure it still covers your home’s energy use.

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. 

You can always choose to get a credit refund if you prefer. Request one at any time in your online account, in our app, or over the phone. You just need to leave credit in there for 1 month’s payment. This is in line with our refund policy.

These topics might have some helpful advice here:
 

It does seem like the direct debit calculation can’t even be overridden at staff discretion. They’ve just tried increasing my mothers direct debit from £50 to £88 when she’s £250 in credit and her last three monthly bills were £16, £18 and £25. I’ve notified them her flat is empty as she’s in a care home, but apparently the most they can do is override their algorithm for 90 days and then their system will try increasing it again and I’ll have to contact them again 🙁

Hey ​@B Robertson, 

I’m sorry for the frustrating situation you’re in. 

The direct debit calculation is based on historic usage in a property, so the more meter readings you submit showing little to know usage, the calculation will adapt accordingly. You could also get a smart meter installed at the property so the readings are sent automatically & you don’t have to submit these yourself manually. It’s worth noting, even if a property is empty, you’ll still need to pay a standing charge. 

I hope this helps. 

It doesn’t really help ​@Emmanuelle_OVO.

My mother has a smart meter, those latest monthly bills are based on smart meter readings that OVO is automatically receiving. Your predictive algorithm is not really the issue, it’s the inability of your customer service staff to override it for more than 90 days. She has storage heaters so normally her bill would rise significantly in the Winter. So based on historic usage you’d be right to increase her direct debits. BUT.. having informed you the property is empty your staff should have the autonomy and power to override the algorithm permanently on an account basis and save me having to contact you every 90 days. I’ve certainly got better things to do and I’m sure OVO staff have too.

To be fair it was an Ofgem directive that DD’s are reviewed/revised more frequently than they used to be.

As Ofgem now review the energy price cap every three months so they expect suppliers to recalculate DD’s at least every  three months. (not necessarily at the same dates as the cap reviews).

For that reason the OVO computer reviews each customers DD every 3-months and sets the amount to what it’s algorithm says is needed for the next 12 months usage. (Well currently 13 months with OVO).

Of course the computer algorithm is a simple one for “Standard” usage and doesn’t cover the full range of possible circumstances, so if your circumstances aren’t “Standard” you then have to play the game of contacting support and getting it corrected to what is actually needed.

Empty propertys using less, credits from schemes like Charge Anytime or Power Move, even the Warm Home Discount credit all act to reduce your future bills but are not considered in the DD calculations.

TBH It’s probably better that way, I would anticipate things getting in a right mess if they tried to factor more into the DD calculation than just simple ‘Standard’ circumstances.

As a developer adding a simple boolean flag on an account to say “don’t run direct debit recalculations” on this account doesn’t add any complexity to the prediction algorithm. I also doubt that Ofgem would regard it as a breach of their directive for a supplier like OVO to exrcise some discretion when notified of a change in circumstances on an account.

As it stands I’d need less ongoing interaction with OVO if I simply cancelled the direct debit on my mothers account and waited until they’d exhausted the £250 credit in approx 5-6 months time, then reinstated it.

Tempting as this may be, cancelling the DD will (again automatically) switch the account to Standard Credit (otherwise referred to as ‘payment on demand’ or ‘payment on receipt of bill’). This attracts a surcharge of 5-10% on the rates applied.

Hi all.

What is going on with the direct debit payments?
Once upon a time I could, and did, raise and lower my payment to manage my usage.
Now OVO have decided they can choose to raise my DD even though they owe me, and my usage has decreased.

The only reason I can think of is that more people have been withdrawing their excess and OVO don’t like that.
Do they do an old fashioned billing system?
I no longer want to pay by DD.

Hey ​@Lewie 

How does OVO work out my monthly Direct Debit?

The aim is to make sure you have credit for 1 month’s payment in your OVO account by the end of March. This is to help cover any change in your home energy use over the course of the year. 

For new customers, this only comes into effect once you’ve reached March. When you first join, the aim is to make sure you have no balance left to pay after 1 year.

Your Direct Debit payment amount will be regularly reviewed to make sure it still covers your home’s energy use.

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. 

You can always choose to get a credit refund if you prefer. Request one at any time in your online account, in our app, or over the phone. You just need to leave credit in there for 1 month’s payment. This is in line with our refund policy.

Useful to know - It’s important you have all the info, then you can decide what’s best for you.

• If you request a refund online, sometimes we’ll need to confirm this over the phone. This is to make sure you have the details of how it’ll affect your energy account.

• Getting a refund might mean your Direct Debit payments will need to increase, once your account has less credit in it.

Our billing system is a live billing system, this means that the balance shown on your online account is always an accurate reflection taking into account

• The cost of your energy usage, as calculated and billed with each time your smart meter sends us a reading or you submit a reading manually.
• Daily standing charges.
• Payments and refunds.

I’ve linked below to a helpful topic all about our billing system and how it works:

If you still wish to cancel your Direct Debit, I’ve linked below to a similar topic on how you can do this:

I hope this helps.

Having come to the end of my fixed rate and found that I'm over £600 in credit, and have never been in debit at any point in the year I'm switching. 

Took great delight at cancelling my DD and the subsequent email demanding that I reinstate it no more than a couple of hours later. I think that tells you everything you need to know.

And yes, joined the forum simply to post this.

I'll be taking daily screenshots of my balance until the switch is complete.

Average month £250.

OVO has upped direct debit to £450

Called and asked them to set it at £280, they refused. They waffled on about winter consumption and I explained that we no longer have storage heaters and my consumption will not change.

OVO stated that they need 6 months consumption to confirm this.

 I advised them that they were not dictating what my direct debit would be and they responded with…. You can switch suppliers but you will be subjected to a credit check at which point I said crack on, never missed a payment and sitting in credit.

Seriously poor customer service and since when did an energy company think they can dictate your finances.

Hi, wander if anyone has thoughts on this. Or have taken a stance. 
On my July quarterly statement it showed I was in credit for £304. I phoned for a refund and was told OVO policy had changed months before and that I had to keep 1 months payment on my account. I argued that I knew of no such policy change as had not been contacted previously about it. I therefore refused as this was not the contract I signed up to, with a bit of to and fro I eventually was given the £300 I asked for… 
roll on next quarterly statement, and they now want to put my monthly payment up by £79 extra. Going from £283pm to £362 because I took my refund!! 
Each year I over pay, with a refund of £500 given back 2 years ago. So why should I be made to up payments when clearly the amount I’m paying now is too much. What can I do. Thinking of just going to someone else

The only way around this is not to pay by Direct Debit. OVO as with most other suppliers does not operate Direct Debit on a whole monthly billing basis. Therefore payments are spread across a year and this for many can result in a substantial credit. This is why billing is done this way so the energy provider is always in credit from you the customer.

I pay the whole monthly bill on demand. While this is regarded the more expensive way to pay it does mean there is no build up of credit balance, a balance you could invest in saving and gain interest.