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

That’s why I speculated that a descent into debt might trigger an ‘out-of-band’ review, since the OP originally complained that her DD was changing ‘almost every month’. 

​If @mum3girls2025  is seeing apparently unwarranted increases in her DD, she can always use the option to reduce it by 10%. This has the effect - I think - of freezing the DD for three months. That’s why I suspect I’ve heard nothing even though my pretty little graph upthreads showed that I was cutting things pretty close to the bone near the end of August. 

My own DD is up for review in a few days’ time. I’m rather hoping that the Warm Home Discount will turn up just in time to scupper any tomfoolery by the automaton. It’s been paid in November every year for the past five years at least, but I’ve not heard anything yet this year 😟
  

I have been paying a Direct Debit of £100 per month since January 2024. However this is what I can see at the moment in what I have always referred to as “that annoying little box” on my account HomePage. For me, that “annoying little box” amount changes several times a month, sometimes every day! According to the Direct Debit Guarantee which  “is a customer protection that applies to all Direct Debit payments and is offered by all banks and building societies that accept them. It ensures you can get an immediate and full refund from your bank if an incorrect or unauthorized payment is taken from your account. The guarantee also requires the organization to give you advance notice of any changes to the amount, date, or frequency of payments. You also have the right to cancel a Direct Debit at any time.” So, if OVO have been altering your DD payment, have they been giving you notice of their intention to do so as required by the Direct Debit Guarantee? I believe that OVO review DD payments for all customers every three months. The only time that I have had a real problem with this was when, having received a “Goodwill payment”, following a Customer Service failure, of £50 in July 2024. This gave me a bill of £26.90 for the month. OVO attempted to reduce my DD to something ludicrous that I told them would put me into debit before the next review! They agreed to leaving my DD at the amount I had agreed to, i.e. £100.  I have always found that I get the best service from using the Messenger facility on the OVO Facebook Page. It is not instant, but you will get, usually, sensible replies.

IANAL, but my interpretation of the advance notice requirement is that they are obliged to inform you of any proposed change early enough for you to be able to change your instruction to the bank, something like 10 banking days before the DD is due to be taken. I’d be surprised if this weren’t the case.
  

For years, I was running a large credit balance, because OVO were paying 5% interest on it - more than any bank was offering. For many months, my ‘annoying little box’ recommended reducing my DD to £5. I did, but only when they decided to stop paying interest. [OT fun fact: all the time that credit balances were earning interest, the interest was deducted before the VAT was calculated. This had the effect of increasing the interest reward by the amount of VAT that would otherwise have been deducted.]

It’s sometimes easy to miss an actual question in the middle of a completely justified rant, so sorry I didn’t answer this earlier 🙂

I mentioned the fact that the Future Annual Consumption is the root of all evil in this particular jungle. A month’s credit is the result of this calculation:

Referring to the Plan page,

1. Multiply the FAC by the Unit Rate;
2. Multiply the Standing Charge by 365;
3. Add (1) and (2) to get a projected annual cost;
4. Add 5% for the VAT (e.g. multiply (3) by 1.05);
5. Divide the result of (4) by 12 to get the estimate for one month’s costs within the meaning of the Act.

This won’t be exact to the penny, because the FAC quoted is shown rounded to a whole number, but when used in calculations, it’s used with a single decimal. There probably won’t be more than a penny’s difference either way in (5).

The FAC may change each time a meter reading is submitted, so the figure might vary from day to day (I check mine once a week). If you’re on a multiple-rate tariff, it gets a bit more complicated unless you know the split between, say, the day and night usage.  Then you have to multiply each element of usage by its corresponding unit rate and add them all together to get to (1). 

Hey ​@mum3girls2025 

Sorry to hear you’ve seen quite a few changes in your Direct Debit, although I’m glad to see a couple of our community members have already stopped by here with some advice.

Bendog mentioned speaking with the Support Team, they can discuss the suggested DD amount and if needed, freeze that in place instead of increasing for the following 3 month period when it’s due for review again. If this took place now, we shouldn’t look to change the Direct Debit amount until February. 

The forecast will likely be predicting a continued increase in usage as shown in the last 3 bills so it looks like this might be why it’s continuing to suggest a higher Direct Debit amount. I do think, like the others have suggested that contacting the Support Team sounds like it might be helpful here. 

I’ve also linked below to a few other topics which might be helpful here:

Thank you Abby. I dont want to freeze my direct debit or ask for the reduction as thats like a payment plan for debt management and thats not what we require.

My query (not a complaint-only a query) was purely why the regular changing of a direct debit. If it is reviewed every 3 months and then changed then thats fine but I wasnt aware thats what happened. Ive previously had a fixed DD withother energy companys which would be significantly more than our usage in the summer to cover the usage in the winter. OVO frequently reviewing and adjusting the DD to cover one months payment in March means its always changing because what IS my payment in March 2026?! If i use my annual usage from 2024 and divide by 12, its not anywhere close to the £325 a month I am currently paying. I dont want to freeze DD or ask for a payment plan-Im not skint and can afford my bill-what is irritating is that this month its dofferent to last month and my account is saying it will be dofferent again next month. 
If that is how it is with OVO i will shut up and just live with it-Its just not how Ive paid for energy before. 

These are my latest bills. I was paying £260 a month. Its increased to £323 which I paid this week as scheduled. Should our direct debit remain at £323 now until Feb 2026 now is that what youre saying and then it will be reviewed again-regardless of the message  you see about reducing to £316????? I just want to understand the system - Im not in financial difficulty or struggling to pay-its just difficult to budget for other stuff if DD is adjusted month on month. 

As I said, that “annoying little box” can be safely ignored like I do. It has never been particularly helpful as, in the past, it referred to your balance at a date 12 months from the publication date. This is one example of mine from 2023. If you watch the box over a number of days, you will see that the “minimum monthly payment” changes often as the month progresses (if you have smart meters). It may be useful as a guide, particularly if that amount changes, suddenly, up or down as it may warn you about something not being quite right about your energy consumption. As others have said, OVO should only review your DD every three months.

Hello,
I just got mail today that told me my direct debit was increasing by 72% from the contract agreed £103 to £146 due to increased usage. Looking at my usage graph I do not see any increase. Can they just put up the DD on a whim like this? I am on a 1 Year Fixed Loyalty plan. I am also in credit to the tune of £200.
Thanks
 

That sounds strange …

• The increase from £103 to £146 is 42%, not 72%. 
• When this last happened to me, the email included this text:
  “Recently, your Direct Debit payment amount was reviewed to make sure it still covers your home’s energy use. The review showed your monthly payments need to increase.”
  Did yours specifically say that the DD increase was due to increased usage?  

This doesn’t mean very much, I’m afraid. With OVO’s live billing model, the balance changes daily, so a credit balance can soon shrink. Have you looked at the Direct Debit Calculator? This will help explain why your DD has to change if it does.  Post back if you’re none the wiser.

Hey ​@CinderKona,

Welcome to the community, 

If you could share some screenshots of your usage, we’d be happy to take a look with you! Another option is to get in touch with our Support Team, who can help review your account and the recent changes to figure out what might have caused the increased usage.

If it turns out there was an error, they can help reverse the increase for you. You can find the contact options for the Support Team in the article below. 

Yes I did thanks. Seems to me that.it needs to cover the whole period until the end of the year including the assumption that winter I'll use far more and I need 1 more month's prepayment.

Can anyone explain why OVO are suggesting that I should increase my Direct Debit ?

I am currently more than +£100 in credit, my DD is roughly £8 per month more than my monthly charges. Even their webpage is saying that I will be about £35 in credit next March when my current contract period runs out.

As far as I can see there is NO REASON for me to increase my DD, so why are they suggesting that I should do so ?

I would be interested to hear other peoples comments

regards

PhilipJ

The direct debit calculator now recommends a DD amount that would get you to 1-months credit at the end of March.

On the Online account click on ‘Adjust your direct debit’ and you will see this but with your numbers in it:

You might notice there that I have set my own DD monthly payment at £135, which is less than the recommendation (£148) but I’m still paying enough to keep a credit balance at the end of March.

If you want to do the same then on the page where you see the above click on the green “Continue” button.

You will be taken to a new page, scroll down and see if this is being offered:
 

If you see that and click on the “Reduce payment now” it will immediately reduce your next three payments to the amount given (ie. there I could have changed mine to £134)

If you dont see that, or if you want more than the 10% reduction you will need to contact support and ask for your DD to be reduced.

OK, that explains why they are suggesting it should be increased, BUT why do they need me to have more than £100 credit at the end of my contract period (March 2026) ?

Is this just a way for OVO to appear to be “cash rich” ?

According to Google, OVO have 4 million customers so if they are doing this to all of their customers then they would have £400million of OUR money in their bank account that they would be earning interest off!!

I would accept that if my account goes into debit I should expect to have to pay the balance immediately but I really don’t think it is fair of them to expect us to “pad” their bank account with our money that they can then earn interest off!!

PhilipJ

We have asked, but haven’t really got a meaningful answer.

The usual”reason” trotted out is just something like “to cover you against high winter bills”, which a zero balance at the end of March (end of winter) does anyway.

Occasionally we get “to comply with Ofgem directions about customer debt” which makes more sense, but Ofgem didn’t tell companies to put DD’s up to do that, or to hold a a months worth of every DD customer’s credit.

Personally I believe that OVO are not actually expecting everyone to get to having a months credit at the end of March.
I believe that they have set the higher 1-month-in-credit-at-March-end target as way of “encouraging” customers to actually comply with having at least a zero balance at March end, and so being in credit all year - as their contract specifies.
They wouldn’t want to admit that though, becasue admitting it would defeat the purpose of the “encouragement”.

TL,DR.

Background on why it is now more important to OVO (and all suppliers) to reduce the amount of customer debt being offset against their capital holdings.

Ofgem have specified “Minimum Capital Floor Requirements” that energy suppliers must have to ensure resilience, so that there is less chance of them going bust.

British Gas, EDF and Scottish Power easily met the minimum capital floor threshold as did smaller players like Outfox and Ecotricity.

However 3 of the big  energy suppliers are struggling to meet the new Ofgem requirements.

OVO have been open in the media about not meeting the Ofgen resillience target; but they are not alone.
Octopus are also struggling to meet the target but being quieter about it.
Eon Next are also failing to meet the Ofgen resillience target.

There is also a hint of suggestion that the new Ofgem rules/restrictions were actually responsible for Tomato going bust. (By preventing Tomato from taking on any new customers).

https://davidturver.substack.com/p/ofgem-asleep-at-the-wheel

Ofgem info:

https://www.ofgem.gov.uk/energy-regulation/business-resilience/financial-resilience-energy-retail-market

Minimum Capital Requirement

Licensed energy companies who supply energy to domestic customers must meet a Capital Target of £115 of adjusted net assets per dual fuel equivalent customer, with a Capital Floor of zero pounds. Adjusted net assets describes the types of capital that are more likely to be able to absorb losses so that companies are more resilient to sudden changes in market conditions.

Licensed companies that do not meet the Capital Floor in the conditions of their licence may be subject to enforcement action.

If they do not meet the Capital Target, they may be subject to transitional measures. They will need to agree a plan with us setting out how they will build up their capital to meet the target.

However Ofgem does warn about using customer credit for this purpose:I

Customer Credit Balances

Suppliers must not overly rely on customers money to fund their business. We may tell suppliers to set aside customer credit balances from other financial resources in certain circumstances. This means that if an energy customer’s account is in credit, their supplier will still have the money to repay in a timely manner.

In fact it’s only a couple of years since Ofgem told suppliers to cut the amount of credit held on customer accounts.

You might also find this of interest:
https://www.ofgem.gov.uk/policy/financial-resilience-transparency-report

Our new rules make sure that suppliers put their own capital at risk and that they are not overly relying on their customers’ money to fund their business. 

Hey Nukecad,

thanks for a detailed and comprehensive reply.

It seems from what you say that once again Ofgem are on the side of the companies and not the consumers although that last line:

Our new rules make sure that suppliers put their own capital at risk and that they are not overly relying on their customers’ money to fund their business. 

does seem to put us in the right…

PhilipJ

Thanks for your in-depth answers here ​@Nukecad.

They have put my DD up to £180 off from £140 and they suddenly think I need to have 1 month minimum of my money in their account come next March. I also saw a thing today that OVO are in the shit a bit and need to raise capital. Having a load of customers cash in their bank will make them look better than they are I think. It’s probably getting time to move or at least go to paying for what’s used even if it costs a bit more. Better money sitting in my account rather than propping up someone’s big Christmas bonus this year. They have never been as good as when it was SSE and now they seem to be getting even more greedy. 

So my inevitable e-mail just arrived, my DD is increasing from £102 to £117. Interestingly it was only a couple of days ago I got the e-mail to say the price cap change means my annual usage is expected to be £1,054. My account is already £289 in credit. Over the next 12 months I’ll pay £1,404 (12 x £117) therefore my projected balance this time next year is £639! Even at £102 x 12 that is £1,224 which is more than the expected usage!

Now I know the reason will be given back to me…. “but you need to have 1 month of credit on 31st March” and it will be spun it’s in my interest. My main issue is the date Ovo use to calculate this. 31st March knowing fine well the vast majority of people pay their DD on 1st of the month. On the 1st April (the day after the low point) I’ll be £234 in credit!

Ovo are taking too short a view of this. They should be pricing to a balance as at March 2027 not March 2026. I believe based on Ovo’s projected usage (£1,054) if anything my payments are too high at £102 (£1,224 pa) with a significant positive balance.

Any way I’ve enjoyed being a customer of Ovo over the years (I like your portal) but it’s time to say goodbye and hopefully find a company with a better ability to price!

I have read up on the change in calculations, but our new direct debit makes no sense.

We have £358 credit. We had a DD of £115. We usually have 65-85 usage per month between April and September, and £135-140 a month when the heating goes on.

With the existing DD of £115, that means we would be at a generously rounded £220 credit come April 2026.

Our DD was now set to £153, which exceeds our actual maximum usage of the last few years. That would bring us to a whopping £420 credit at the end of March.

I tried to change it back to £115, but the system insists we will not have a month’s worth of credit.

Can someone please manually change the direct debit back to the old amount? If not, what are my options other than cancelling the DD entirely and paying bills on demand, even taking a potential tariff increase into account? I would prefer to stay on DD, but not with forced overpayments that build unnecessary credit balances. I know OVO is currently having trouble proving that it’s crisis proof, but bleeding your customers to use them as a piggy bank is not the way to go at it.

Perhaps the first thing to do would be to find out why it makes no sense. Once you can see where the numbers come from, you can probably either learn to live with them or look for steps to take to change them.

This means very little. OVO’s live billing system means that the account balance changes daily, so a £358 credit could easily drop to £228 later in the month. The current balance is taken into account by the Direct Debit calculator, though, so a credit is deducted from the future costs to find out what the monthly payment should be. 

The size of earlier bills is not particularly relevant, either - there are just too many factors involved. What does count are the estimates of Future Annual Consumption (FAC) and the current tariff prices. If your FACs are very inaccurate, so will the DD calculation be. You can see them on the Plan page (in a browser, not the app). How do yours compare with actual usage? 

The Home Page of your OVO online account gives you access to this neat little tool. My balance today is just over £350 but today is only the second day of my billing cycle, so each day this balance will reduce until the 28th December when my next DD is due. I actually choose to keep my balance at a particular level and resist attempts to reduce it as I have a fixed income and like to be able to choose to be warm in winter! Perhaps, playing with this feature may help to explain the Direct Debit that has been calculated for you. If it doesn’t, I suggest you contact OVO. I find that I get my best response by using the Messenger function on OVO’s Facebook page. 

Hi ​@Graeme,

Sorry to hear you’re considering leaving because of this. I’d recommend getting in touch with our Support Team who’ll be able to calculate things manually for you. If anything is incorrect, they’ll be able to put your Direct Debit down to what it needs to be, and halt any further Direct Debit reviews whilst the issue is fixed.

Morning ​@Mendo and welcome to the OVO Forum, I hope you’re well.

I’m gad to see Firedog and Bendog have come by with some really helpful responses here. How long have you been with us as a customer? Will this be your first winter on supply with us? If so, we won’t know what your winter usage will look like.