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Is OVO now excluding summer when setting minimum Direct Debit amounts?

  • 14 October 2023
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U
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A bit like you’ll have to get off of Windows 7 sooner or later - Firefox won’t support you beyond September next year and then things will really start to break for you.

 

Yeah, that part I am forced to agree with. 😄

Jeffus
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For anyone reading this with short term issues regarding Direct debits. 

You can always try calling ovo collections and asking if they will freeze Direct debits at a lower level for 3  months. You can then repeat this once in 3  months time. 

This is often recommend by the moderators for a variety of situations. Obviously I don't know what they will agree in individual circumstances. 

0800 0699 831

The Ovo moderators also often post about the option of requesting a refund of credit if you have short term issues managing finances for example or have built up what looks like a large  balance. You can request some online but may need to phone up. The moderators often post this:

If you’re on a fixed rate tariff, you’ll still be required to keep one month's worth of direct debit as credit in your account. If you’re on the Variable tariff you aren’t required to leave any credit on your account, although it is advisable.

 

 

Firedog
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Supposing no changes to tariff or annual consumption for the sake of simplicity, should my required minimum monthly payment revert to £87 from 1 April 2024?

 

Not necessarily. The ‘minimum monthly payment’ - or Recommended Direct Debit (RDD), as OVO like to call it - depends on both the predicted annual cost (PAC) and the current state of the account. If you’re currently in credit, then the RDD will be less than 1/12 of the PAC, but if you’re in debt, it will be more. 

Looking at the DD calculator’s Cost chart, hovering over each column will show you what each month is predicted to cost. This is PAC/12, seasonally adjusted. Under the old system, you would have seen the cost for what’s left of this month on the first column and for the first few days of the same month a year hence on the last of the 13 columns.

Now you see exactly the same as before, but only up to and including March next year. This works out from today 16 October at about 52% of your PAC. So the calculation now is
[(0.52 x PAC) ± current balance] / [no. of DD payments left between now and 31 March]

± would be + for a balance in debit, – for a credit balance. 

From 1 April onwards, assuming you did arrive at a zero balance by then, your RDD would simply be PAC/12. Paying this would build up credit over the summer, to finance the bigger-than-average monthly costs during the following winter. 

So if you currently have a balance in debit, OVO is attempting to get you to pay off your accumulated debt by 31 March at the same time as you’re paying for the energy being used. This is why the RDD has increased significantly with this new system, where debt is to be eliminated by 31 March instead of by twelve months hence.

With no historical debt to pay off, from 1 April your RDD should theoretically be significantly less than it is today, but of course tariff changes make that unlikely. We’ll see how it works out.

 

PS

I just checked and see that @Emmanuelle_OVO has updated the DD tutorial to say more or less the same as me in a lot fewer words 😳 

 

Noel | I have no official status; I'm just a volunteer who comes here to help other customers. My gear: Aclara SGM 1416-B Electricity-only E7 meter; Chameleon IHD3-PPMID-AAA
Jeffus
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Yes, but it’s precisely the one-off sync issue that I’m objecting to. If I were currently paying the minimum, then the system realignment wouid have two consequences for me:

(i) I would have to pay at two different rates over the course of the next 12 months, with the higher rate kicking in immediately and unexpectedly;

(ii) I would have to pay £126 in excess of OVO’s current forecast of my annual energy costs.

Both of which seem to me reasonable concerns.

I think these are not unreasonable concerns over this winter. 

I will certainly be looking out for any posters who may struggle in the short term as the new system settles down. 

If we have a cold winter and potentially a sky rocketing increase in the variable tarrif in January might we see a few customers struggle big time to get their balance to zero in the time frame? 

Over the last year across suppliers the number of homes in debt for energy  has gone up from 2.8million to 3.2million. 

I assume ovo have done some modeling of the impact on customers who typically struggle anyway? 

​​​

 

 

U
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Userlevel 2

Hi @Firedog,

Unfortunately the Direct Debit calculator has never been accessible on my account for some reason. It’s been that way since it was opened (I’ve never had the energy to raise it with anyone). So I’m working in the dark to some extent.

It isn't a question of paying off debt in my case, though. My account was zero in July. It was £50 in credit when both those screenshots were taken. (It's now £75 in credit following my latest payment).

What follows is my non-technical understanding of the situation, after reading all the comments (someone please correct me if I've still got it wrong...).

The algorithm for calculating direct debits was originally designed to enable customers to pay off their ANNUAL usage in TWELVE equal instalments, calculated from anniversary to anniversary. From now until 31 March, a new algorithm for direct debit calculation will be in place, which will require the customer to pay off this year's WINTER usage in SIX equal instalments.

The former algorithm (i.e. ANNUAL usage in TWELVE equal instalments) will then be reinstated, except that the anniversary date for variable accounts will be replaced by a single fixed date (31 March) going forward.

So the principle of 12 equal monthly instalments goes out the window in the short term.

Now, applying this to my specific situation. My minimum direct debit under the "old" calculating method was £87. My minimum direct debit under the "new" calculating method will be £108: that's £21 more per month. After 1 April, the "old" method will be reinstated.

I’m currently paying £110, which happens to be higher than both the "old" minimum payment the "new" minimum payment and would lead on current tariff rates to a credit balance of £280 in twelve month's time (screenshot #1).

However, I’m still going to be affected. I budgeted for £110 precisely because I thought it would be high enough above the minimum to cushion me against the next round of price cap increases (which everyone knows are coming).  I figured it might also let me loosen the reins a little in terms of gas usage this winter, after shivering last year like everybody else.

OVO's latest change has instantly removed this cushion. All of a sudden, my £110 monthly payment is going to be so close to the minimum this winter that any increased heating at all will lead to an enforced increase. And of course there is no longer any possibility of it now absorbing the January price cap rise. I'm just grateful I don't have to find an extra £21 every month this winter to accommodate OVO’s bright idea. I’d have had to do so if I'd been paying the minimum.

I still find the implementation, without prior notice, of a significant change in the established direct debit calculation method very hard to square with the T&C’s. Perhaps the wording of the “Direct Debit rules” section of the T&C’s will be changed before too long (actually, I’ll make that my psychic prediction of the week).

H
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To work out your monthly Direct Debit amount, we:

  • look at your energy use to date and how much you’re likely to use until 31 March, or the end of your contract if you’re on a fixed plan

     

So it seems the new date only applies to variable rate customers, fixed remains over 12 months.

I’ve not been informed of this contract change , They have does this to ensure we have paid all our bills by the end of winter, the cynic would say they have done this to try and force you to accept a fixed contract to return to a 12 month calculation.

 

This seems very unfair, I wonder what OFGEN would say about this?

I think over the week I will ponder a which to BG who will still use the 12 month calculation method.

 

Shame I used to like OVO and its usage breakdown but it seems they no longer wish to help people in these hard times.

Blastoise186
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To work out your monthly Direct Debit amount, we:

  • look at your energy use to date and how much you’re likely to use until 31 March, or the end of your contract if you’re on a fixed plan

     

So it seems the new date only allies to variable rate customers, fixed remains over 12 months.

I’ve not been informed of this contract change , They have does this to ensure we have paid all our bills by the end of winter, the cynic would say they have done this to try and force you to accept a fixed contract to return to a 12 month calculation.

 

This seems very unfair, I wonder what OFGEN would say about this?

I think over the week I will ponder a which to BG who will still use the 12 month calculation method.

 

Shame I used to like OVO and its usage breakdown but it seems they no longer wish to help people in these hard times.

As I’ve said above, this “not currently using 12 months” state is only a one-off as everything re-syncs to the new target. After the 1st April 2024, it will return to the 12-month calculation cycle method - it’ll just be that the system will set the next target as the 31st March 2025, then the 31st March 2026 and so on.

Ultimately, it wouldn’t have mattered when OVO changed the target to the 31st March - it’d have affected someone regardless of what time of year the change was implemented. Better to breakfix it now than wait until later.

Securing energy by zapping security bugs... For that is The Blastoise Way!
H
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That may be the case , but how were we notified of this contract change and why does it not apply to all customers?

So switch suppliers, pay less, see where you are after winter and you can always switch back.

The way this is being done we are just being moved to a rough guess bill monthly.

 

M
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I’ve not been informed of this contract change , They have does this to ensure we have paid all our bills by the end of winter, the cynic would say they have done this to try and force you to accept a fixed contract to return to a 12 month calculation.

The Direct Debit rules in section 7.11 of your OVO Terms and Conditions, which you have accepted, already, oblige you to maintain a credit balance at all times. What this method means is that you end winter with near enough a zero balance, if you pay the minimum payment and then build up your credit in spring, summer and early autumn. 

If you pay the new minimum payment, the balance you will have on 31st March 2024 (ie near enough zero) is no different to the minimum balance you were already contractually obliged to maintain at all times.

OVO Energy Terms and Conditions

Blastoise186
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This isn’t a contract change so doesn’t have those requirements.

Fixed Rate Tariffs have a fixed end date and by design, the target will always match that. Variable Rate Tariffs have no end date and therefore cannot be mapped to one as easily - because there is no contract to map it to per-se.

Securing energy by zapping security bugs... For that is The Blastoise Way!
H
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Why paying by Direct Debit is the best way to pay?

  • it spreads your year’s energy costs evenly over 12 months

 

https://www.ovoenergy.com/help/article/how-do-direct-debits-work

I moved to variable in October when my fixed plan ended, this is not spreading the cost over 12 months, its a change to what was expected.

Blastoise186
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Usually, OVO will spread the cost over 12 months. This is purely a one-time update to the system that adjusts when that 12 months cycle starts and ends. Nothing more, nothing less.

Securing energy by zapping security bugs... For that is The Blastoise Way!
U
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Userlevel 2

The Direct Debit rules in section 7.11 of your OVO Terms and Conditions, which you have accepted, already, oblige you to maintain a credit balance at all times. What this method means is that you end winter with near enough a zero balance, if you pay the minimum payment and then build up your credit in spring, summer and early autumn. 

If you pay the new minimum payment, the balance you will have on 31st March 2024 (ie near enough zero) is no different to the minimum balance you were already contractually obliged to maintain at all times.

OVO Energy Terms and Conditions

 

You twice use the phrase “at all times”, but those words aren’t in the contract:

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

This could conceivably denote a general overall obligation, not an obligation covering each and every month.

If your interpretation were correct, you would never be allowed to have a negative balance - which is hard to reconcile with the webpage advice already quoted by @Jeffus :

“ Some months, we might take less than the set payments you put in, because you didn’t use as much energy. This would result in you having a positive balance. Other months, we might take more from the pot, because you used more energy. This could lead to you having a negative balance.”

https://www.ovoenergy.com/help/article/how-your-account-balance-works

That page is very careful not to say that having a negative balance is always a breach of the Direct Debit rules.

 

Blastoise186
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Technically speaking, you should have a credit balance at all times. However, OVO won’t take any enforcement/debt collection action against you if they’re satisfied you’re on track to pay off the bills based on the payments you’re currently making and therefore there is a tolerance in that regard.

Securing energy by zapping security bugs... For that is The Blastoise Way!
U
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Here’s what @Abby_OVO told me on another thread a few months back:

 

https://forum.ovoenergy.com/my-account-140/is-it-ok-or-not-ok-to-have-a-debit-balance-15450

M
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@userJP

If you agree to keep the account in credit, you are agreeing not to have a debit balance. 

Likewise, if you are paying for your energy IN ADVANCE, you don’t have a debit balance. 

OVO might not have been enforcing it, but it is there in black and white in the T&Cs that you are supposed to keep your account in credit and that you will pay for your energy IN ADVANCE.

As I said in my very first reply to you, “ the furtive bit seems to be that it now seeks to ensure that you NEVER have a debit balance on your account if you pay the minimum”.

U
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Userlevel 2

@userJP

If you agree to keep the account in credit, you are agreeing not to have a debit balance. 

Likewise, if you are paying for your energy IN ADVANCE, you don’t have a debit balance. 

OVO might not have been enforcing it, but it is there in black and white in the T&Cs that you are supposed to keep your account in credit and that you will pay for your energy IN ADVANCE.

 

 

In that case, @Abby_OVO should not have told me what she did.

M
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@userJP

You are also misrepresenting “Some months, we might take less than the set payments you put in, because you didn’t use as much energy”, because that isn’t referring to direct debits .. it is referring to the pot of credit that you are supposed to have accumulated. 

M
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In that case, @Abby_OVO should not have told me what she did.

Why? It simply represents the fact that OVO operate a certain leniency. 

That has nothing to do with the fact that we are pointing out that claiming that the change in how the direct debits operate represents a contractual change, that you should be informed about in advance, is *edited by moderator* nonsense when it clearly operates as per the existing T&Cs.

You are conflating two separate issues.

U
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Userlevel 2

 

In that case, @Abby_OVO should not have told me what she did.

Why? It simply represents the fact that OVO operate a certain leniency. 

We are simply pointing out that claiming that the change in how the direct debits operate represents a contractual change, that you should be informed about in advance, is palpable nonsense when it clearly operates as per the existing T&Cs.

 

If you read the other thread that I linked to, you’ll see that I was the first to draw attention to the apparent discrepancy between the Direct Debit rules in the T&C’s and the webpage advice. I did so in an honest effort to get some clarity on the issue.

If the existing T&C’s are in line with OVO’s new 31 March requirement, then the existing T&C’s won’t have to be changed. Let’s wait and see.

M
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@userJP 

Well, as far as I am aware, you and @HighPeakRider seem to be the only ones suggesting that the T&Cs need to be changed. 

There is nothing in the T&Cs to say that OVO can’t be lenient .. or change that leniency. 

Jeffus
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In that case, @Abby_OVO should not have told me what she did.

Why? It simply represents the fact that OVO operate a certain leniency. 

That has nothing to do with the fact that we are pointing out that claiming that the change in how the direct debits operate represents a contractual change, that you should be informed about in advance, is palpable nonsense when it clearly operates as per the existing T&Cs.

You are conflating two separate issues.

I hope you don't mind me giving some feedback.

Posters will often have different opinions, which I think is OK. 

 I think the poster is expressing an opinion which you don't agree with which is fine. I think you should apologise. 

 

 

 

M
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@Jeffus

It is not about opinions - it is what is there in black and white in the T&Cs.

A clear agreement to keep you account in credit, and to pay in advance for your energy, isn't open to interpretaion. .

U
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Userlevel 2

@userJP

Well, as far as I am aware, you and @HighPeakRider seem to be the only ones suggesting that the T&Cs need to be changed. 

 

OK, it’s my fault for not directly addressing the point you made eariler.

I drew attention to this passage in the T&C’s (7.11):

“We can ask you to increase your Direct Debit amount anytime if prices change (in line with this contract) or you’re using more energy than we estimated. If you don’t do this by the date we give you, we can automatically increase your Direct Debit to an amount that means your account won't end up in debt by the date of your contract anniversary“ (my emphasis).

OVO proposes to introduce 31 March as the relevant date, rather than the date of the contract anniversary.

Your argument is that the new system is covered by the existing T&C’s. You point out that if an account won’t end up by 31 March, it won’t be in debt by the contract anniversary either. This is true - very obviously true - but in my view it is facile, because it makes the reference to the contract anniversary date redundant.

I think your interpretation proves too much. If it were correct, the clause would permit OVO to increase the Direct Debit arbitrarily at any time, as literally any increase, at any time, would be consistent with the account not ending up in debt by the contract anniversary date.

In my view, mention of the date of the current anniversary serves as a contractual limitation of OVO’s entitlement to automatically increase a customer’s Direct Debit. The clause reflects the previous method of calculation, which has now been changed. That’s why I believe the T&C’s will have to be changed, if only to include the 31 March date as the new fixed reference point.

M
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@userJP

NOTHING that I have said implies that "the clause would permit OVO to increase the Direct Debit arbitrarily at any time". ... ie in a random and unreasoned manner or on a whim. Nor does the law allow that.

 

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