OVO have sent an email about my Direct Debit - Why are you increasing my monthly payment when I’m already in credit?

Ovo is proving very difficult to deal with in order to get my Direct Debit at a level where I do not build up a huge credit through the Summer months …. we also hear that energy costs will decrease shortly.

I have decided to cancel my direct debit and pay monthly by bank transfer/card payment on receipt of a bill. This means I only pay for the energy I have actually used …. if you speak to Ovo they try and encourage you to have a Smart meter installed which I certainly do NOT want. 

I would rather pay a small additional amount and have control over my finances ….

David Spinks

You seem to miss the whole point of a Direct Debit based setup…

The whole idea is that you build up credit during the Summer and burn it through the Winter so that you’re even at the end of the year. I note that this would be the third time we’ve mentioned this to you via the Forum:

What you’ve potentially just done is shot yourself in the foot by losing that stability. You might want to reconsider...

You may be misunderstanding the fixed-Direct-Debit scheme. For a start, you agree to keep your account in credit. This means that if you pay the same amount each month, it will have to be big enough to ensure that the account doesn’t go into debt. I just checked with my own rates and found that if I started the ‘DD year’ with a zero balance on 1 April, by the end of summer (30 September) I would have built up a credit of about three weeks’ worth of consumption. I wouldn’t call that ‘huge’.

The ‘small additional amount’ you pay to be free of the DD yoke is of the order of £10 a month for a typical household. I hope you find it worth the extra expense.
  

Here are some comments I made in another thread on the same topic:

Once next quarter’s prices have been announced (on Friday 23 May this week, I think) I expect the DD calculator to be updated so that its recommendations reflect the change for customers on variable tariffs. 

Hey ​@dspinks41 

I can see our community members have already given some helpful advice here,

I just wanted to add the following topics which you may find helpful:
 

Has anyone else had a sensible reply from OVO explaining why they now calculate the direct debit so that we are a month in credit on 31.03.2026 i.e. just before the period where the direct debit will exceed the usage anyway .

I thought they were supposed to ask customers to increase, not demand and then threaten to remove me from the fixed tariff if I cancel my DD and pay the same amount as a lump each month.

BTW I am around £75 in credit as of today, which is about a month and a quarter DD.

Hey ​@Nige12rose,
 

I understand your frustration, 

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.
 

Why have I been informed that I need to increase my monthly payments from £280 to £195 when I am £629 in credit.

It’s likely based on your usage that by the year end there will be a short fall if payments are not increased. That’s the likely answer for your query but it is worth taking up with customer services to check your usuage and estimated bills across the year. 

There is no need to increase your payments. Just ridiculous. 

Hey ​@Polb65,

Welcome to the community! 

It looks like your payments have decreased from £280 to £195, which is a good change! Are you sure you’ve understood the message correctly about your payments not going down while you're in credit? If you have any questions or concerns, I recommend reaching out to our friendly Support Team. They’d be happy to review your account with you! I've included their contact options below for you.

My bills are roughly £187 per month and im £352 in credit, ovo are asking for £240 a month which I feel is excessive, and I can’t lower it.  I’ve never missed a payment and have always paid more. 

Morning ​@Slr75,

How long have you been on supply with OVO now? Will this be your first winter on supply with us?

Please could you also confirm whether you have smart meters that are giving readings?

I’ve been a customer for about 6 or 7 years and yes I have a smart meter. 

​@Slr75 if you’ve been with us that long and have smart meters the usage data we hold for you should be bang on accurate.

For peace of mind, what you could do is calculate your annual usage against your rates and standing charges, to work out your average monthly cost. You should then find that the average cost will be around £240 per month.

For example:

Electricity

Take today’s read and the reading from the same date last year, and subtract last year’s from this year’s. This’ll give you your annual electricity usage eg:

Today’s reading (5500) - reading from 21/11/2024 (3000) = 2500kwh per year.

You can then multiply this figure by your unit rate eg (example unit rate 22.5p/kwh):

2500 x 0.225 = £563 per year.

You’d then need to add on the standing charge eg (example standing charge 28p per day):

0.28 x 365 = £102.

You then add together the two annual figures, and make sure to remember the 5% VAT on top eg:

£563 + £102 = £665

£665 x 1.05 (5% VAT) = £698 per year electricity inc standing charges and VAT.

Gas

The same calculations as above, but first you’ll need to convert your gas usage to kwh’s (your gas will be recorded on the meter in cubic metres) eg:

Today’s reading (5500) - reading from 21/11/2024 (3000) = 2500m³ per year.

You then need to convert the 2500m³ to kwh. To do so use this calculation:

2500m³ x 37.5 x 1.02264 ÷ 3.6 = 26,631kwh

You can then take the figure of 26,631kwh and do the exact same calculations as in the ‘Electricity’ section above.

Once you have the total costs of electricity and gas usage, plus VAT and standing charge, you can add these together and divide by 12 to get your average monthly cost. 

We convert your metered gas units to kWh using the following formula: Metered volume × metric conversion factor* × daily calorific value** × 1.02264 (volume correction) ÷ 3.6 = 2 kilowatt hours (kWh) used.

*We convert the gas use into kWh according to your meter type – 2.83 (imperial) or 1 (metric).

**The calorific value of gas changes every day and can range from 37.5 to 43.0. To find out calorific values used to calculate your charges you can visit: https://data.nationalgas.com/find-gas-data

I hope this helps!

I have an electric car, my direct debit covers what I use and more. My company also pays for any electric used by my RV charger.

I'm massively in credit (nearly half my yearly usage!) OVO keep putting my DD up as they don't count the payment my company puts in as a payment.

I'd rather have the money in my account!

This doesn’t sound right. If the company pays into your OVO account, it will be used to increase the balance. The balance is taken into account when the DD is calculated. Could you please explain the sentence I quoted? 

That's exactly how I see it too.

In their words because it's not a direct debit, they don't see it as a regular payment because it's a direct transfer.

I'm now £1200 in credit!!

This is why the old system where ACTUAL credit in your account each day was what was used to calculate your DD for the next 365 days. We now have this ridiculous situation where OVO have decided that, for every customer, their billing year ends on March 31st. I am, at present, over £300 in credit and a further £100 will be paid into my OVO account in 5 days time. Even using their DD Calculator and using their £84 minimum payment, even their own calculator does not assess that I will have the required 1 month’s payment in my account, but around 38% more than that. I am not sure whether this is in the spirit of both Ofgem directives about energy companies reducing customer excess balances and discouraging debt. 

Yesterday, Sky News described OVO as a “struggling energy company” about to make 100s of employees redundant in the coming week!

The “struggling” is a bit of a false situation.

OVO, Octopus, and Eon Next are all 3 “struggling” to comply with new'ish ‘Financial Resilience’ rules that Ofgem imposed on all suppliers.

So it's not struggling financially as such, it's a case of not meeting the Ofgem imposed rules.

Those 3 are by no means small startup companies.

So does that suggest established companies have got their financing wrong? - or does it suggest that Ofgem might have been a bit too strict with their ‘Resilience’ rules?

Apples and goats, I’m afraid. The £84 minimum payment is the amount which, if paid on every DD date between now and 31 March, will leave your account with one month’s costs in credit. A month’s costs 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.

The minimum payment takes into account your FAC, the current rates, any upgrades and the current balance. There will be some customers for whom the system sometimes aligns perfectly, so that the minimum payment is close to one month’s costs. For most people, most of the time, there will be no such alignment. 

They change the wording of the texts on the DD calculator pages from time to time. I’m not sure the ‘end-of-term-buffer’ has always been called credit for 1 month’s payment; I’m fairly sure it used to be less ambiguous. 

[Watch out for a change to the end date. Last year, it had already happened by this stage in November.]

I know that is the case but, for some reason, OVO are, frequently, singled out whenever there is a problem to be the “headline act”. In the Sky News article, Octopus was mentioned, in passing, but EON Next was not mentioned at all. The whole article appeared to be very anti-OVO. The report also states that OVO’s agreed plan with Ofgem “is likely to include restrictions on taking on new customers while Ovo's finances are placed on a sustainable footing, according to industry sources.” No such details are given for either Octopus or EON Next. This kind of reporting will affect customer confidence in OVO and is not going to attract the new investors they are said to need. 

I totally agree, it does sometimes seem like someone has an axe to grind with OVO, in these news stories.
But TBH I think its just the usual case of reporters dragging as much drama as they can out of any situation and trying to make mountains out of molehills.

The “likely” (read possible but not that likely)  “restriction on taking new customers” will have been trotted out because that is what Ofgem did to Tomato earlier this year.

And many believe that in the final analysis it was that action by Ofgem that doomed Tomato to quickly go bust.
OK they were struggling anyway, but the Ofgem ‘no new customers’ action ensured that they had little to no chance of recovering.
(Was that Ofgems’ actual intention? I’m not going to point the finger, but it does make you wonder).

Except that Deloitte pretty much killed Tomato way before.

https://find-and-update.company-information.service.gov.uk/company/09735768/filing-history

Auditors Resignation letter says it all - they pulled the plug because of the Senapt platform.

It is notable however that Deloitte do also mention the Ofgem restriction in their Statement of Reasons for withdrawal as auditors.

They do state: “Whilst not related to our loss of office” - but if that were true then why mention it?

Statements or Reasons shouldn’t mention unrelated matters, they are statements of  the reasons for doing something.

I read that as a bit of lawyer speak weasel wording confirming that the 9th July 2025 Ofgem Provisional Order was the last straw for Deloitte, and definitely a large factor in Deloitte’s decision to resign as auditors.
(Weasel wording because they don’t want to say it outright and thus point a finger at Ofgem).