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

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.