Is it OK or not OK to have a debit balance?

Hi,

Forum volunteer here.

That’s fine. As long as you continue paying at least the minimum amount via DD each month, you won’t end up with Collections. It’s expected that you’ll spend part of the year in Credit and part of it in Debit, so you should be fine. As long as it’s all ultimately paid off, that’s what counts.

To be safe though… Try making it £120 a month and see what that does.

Thanks, that’s certainly reassuring!

I thought that would be the case, but the Direct Debit Rules in 7.11 of the T&C’s did have me wondering:

“When you agree to pay us by Direct Debit you agree that:

[...] account in credit - you’ll keep your energy account in credit by paying for the supply in advance.”

I’ll check that one with the forum moderators. Bear with me!

But ultimately, as long as your payments go through each month successfully and they’re at least what the minimum amount is, you should be good. OVO will let you know if they need increasing.

Hi @userJP , the ‘norm’ would be for you to have a months credit on your account from what I’ve seen. I used to have the same situation as you describe but I think due to the problems with energy companies going to the wall, most now operate on a payment ‘up-front’ basis. 
Having said that, the system should prompt for an increase in your dd so if it’s happy for now, perhaps leave it until then

@BPLightlog Yes, I wish the official position was a bit clearer. I did come across an official explainer page on the OVO site which said something to the effect of “if you go into debit for a while, that’s fine too” - but I can’t remember now where I saw it.

Ah, found it!

How does your account balance work?

The amount of energy you use changes. You might use more in winter when it’s cold and dark. And less in summer, when you don’t need your heating or lights as much.

Think of your energy account balance like a pot of money – set payments go in, different amounts come out. Each month we send you a bill for the energy you’ve used, and take the amount you owe from this pot of money. Some months we might take less than the set payments you put in, so you might have a positive balance. Some months it might be more and you might have a negative balance. But don’t worry, it’ll all even out.

We’re aiming for you to have a zero balance at the end of 12 months. So you won’t have to pay us a lump sum of money.

https://help.ovoenergy.com/article/3a8ed44a-96c6-4312-b55a-df5484ff2e82-web

That does seem clear enough, now that I read it again.

Hi @userJP 

I assume you are on the default Simpler Energy Plan

If so you can see how much in kWh and £ OVO think you will spend over exactly 12 months  including vat (ignoring any credit you may have, although you said zero credit expected at 16 July anyway)

On the ovo website 

https://products.ovoenergy.com/journey/renewal/energy-renewal

Look on the Tariff Information Label for the Simpler Energy plan.

You can conpare this to any figures you calculate.

Here is mine for example 

Important to remember the standing charges and unit costs  are variable. Ofgem provide updates of the maximums every three months, but suppliers can change them at any time subject to these maximums and appropriate notice.

So you will need to re look at your figures regularly. as the price cap changes..

The lack of fixed rate plans on offer below the current price cap gives some indication that prices are currently expected to rise a bit over winter unfortunately. Hopefully not very much. You may well find your January onward costs over winter are higher than you think.

Many thanks @Firedog and @Jeffus  for your insights. I realise my graphic is very schematic, and unlikely to be mirrored exactly in the year ahead. But it does illustrate the point I wanted to get some clarity on: namely, whether the Direct Debit set-up is designed to cover negative as well as positive balances, or whether (as the T&C’s appear to suggest) there is an obligation on the customer to keep their account permanently in credit.

On the one hand, the OVO explainer appears to settle it: “Some months it might be more and you might have a negative balance. But don’t worry, it’ll all even out.” That’s in line with the interpretation offered by @Blastoise186. It’s also the way the Direct Debit scheme was explained to me as an SSE customer when they introduced it a few years back (I remember they had a sine-curve seasonal graph with half in positive balance and half in negative - I’ll see if I can dig it out).

“OVO don’t charge interest on debt (at the moment), so it’s really up to you and your conscience whether you’d rather take an interest-free loan from them than shell out an extra £90 now for peace of mind. I know what I’d do in your shoes...”

I don’t see it as a matter for pangs of conscience, to be honest, since the situation is entirely symmetrical: OVO gets an interest-free loan from me for half the year, I get an interest-free loan from them for the other half. So it balances out exactly. And again, SSE gave me to understand that the scheme is designed to work in precisely this way.

That said, I’m quite prepared to bring the account into credit (and keep it there) if there’s now a contractual requirement to do so as a condition of using the Direct Debit scheme. Is there, though? That’s the point I’d really like to focus on, because I’m not clear in my own mind about it.

Can I rely on that OVO explainer which says that negative balances are OK? Or has this website advice been superseded by the contractual Direct Debit Rules? They do appear to be in conflict, on the face of it.

@userJP Honestly, given this is a forum of customers helping each other out, you either need to phone/webchat OVO directly to get anything absolutely confirmed about their process if you are still unsure or look out for a post from an OVO moderator with _OVO in their name.

I say that as a general comment rather than specifically about this topic.