What is the BENEFIT to the customer in getting a smart meter?

Thanks, that does help explain how OVO are calculating it, and I understand the difference between a constant Direct Debit and a variable Direct Debit.

However, I think this is also part of the problem I was originally getting at.

If the Direct Debit is based on Future Annual Consumption, tariff rates, and account balance, then it is still effectively working from an annualised forecast rather than simply billing against what has actually been used each month.

I understand why some people prefer the constant Direct Debit model, because it smooths the cost over the year and avoids larger winter bills. That makes sense for customers who want predictable payments.

But for customers like me, who are not in arrears and are quite capable of managing the account, it can feel unnecessary and over-controlled. If the smart meters are providing accurate readings, then the system already knows what has actually been used. That is why I question why the Direct Debit still needs to be pushed around by automated annual calculations rather than actual billed use.

My issue is not that the calculation has no logic behind it. My issue is that the logic does not necessarily suit every customer.

The smart meter gives OVO regular accurate readings, but that has not translated into what I personally would call a better customer experience. I still had to challenge or manage the Direct Debit myself, and the suggested amount still did not feel aligned with my actual usage and account position.

So yes, the FAC may explain why the Direct Debit amount seems inappropriate. But that also reinforces my point: the smart meter itself has not solved that issue.

For me, the only clear benefit has been practical access to my gas meter, because it is awkward to read manually. Beyond that, I have not seen the smart meter deliver the customer benefit I expected, especially around Direct Debit accuracy.

Morning ​@fznuk, good to hear from you again.

I’m glad to hear that everything is working as it should be. 

With regards to the Direct Debit, I can understand that the way its set up may not suit you. I personally prefer the way we run Direct Debits, as I know I can pay the same amount every month, without having to worry about paying higher bills in the colder months. However, other people, yourself included, feel better paying for exactly what they use each month. bare in mind, with the current Direct Debit setup, you’re still paying for exactly what you use, however the remainder of the money is sat in credit in your OVO account.

If you’d prefer to pay the exact bill amount each month, there are two options open to you. Firstly, you could switch the Simpler Energy (variable) plan, and pay on demand, rather than with a Direct Debit. Bare in mind that, if you do this, the unit rates will be higher than if you have a Direct Debit set up.

The second option would be to switch to another energy supplier that offers variable Direct Debits, as outlined by ​@Firedog. We’d of course be sad to see you leave, however we’d always promote switching if it means you an benefit from something OVO don’t offer, be it lower prices, a different package, or a different Direct Debit structure. 

Bare in mind that, if you go for either of these two options immediately, you might incur exit fees depending on which type of plan you’re on. 

let us know if you have any other questions.

The Future Annual Consumption estimate is for most customers exactly equal to ‘what has actually been used each month’ summed over a year. The estimate takes no notice of future tariff rates or indeed balances - only current figures at the time of calculation. ​

You can see the suggested DD level on the DD Calculator page, where you can also see what the effect would be of increasing or decreasing it. Unless the account drifts into debt, the DD will only be reviewed at quarterly intervals (and possibly following a change of tariff rate or a refund).   
  

You mentioned earlier the requirement to aim for ‘one month’s credit’ at the end of March. The end of March is chosen as being the end of winter and for many customers the end of the heating season. This is the point of the year when account balances are usually at their low-water mark; setting that mark to the average month’s costs is just a buffer to prevent the account falling into debt should something untoward happen, like a DD payment getting lost. Many customers in fact prefer to keep a bit bigger buffer for peace of mind - 1½ or 2 months’ credit, say. 

Thanks, that explains the mechanism better.

I understand the logic of using the previous 12 months’ usage as the Future Annual Consumption figure, and I can see why that works for some customers.

However, my point is more about whether this is really a benefit of the smart meter to the customer, rather than a benefit to the supplier and their billing model.

If the smart meter is sending accurate readings, then OVO has the information needed to bill accurately. The fact that the system still works around a fixed Direct Debit, annualised usage, quarterly reviews, and a target credit balance means the smart meter has not really changed the part of the process that frustrates me.

The one month’s credit buffer may make sense from OVO’s point of view, and I accept that some customers may like having extra credit sitting there for peace of mind. But I do not personally want my energy account treated like a savings buffer for the supplier. If I am not in arrears, and I am managing the account properly, I do not see why the system should aim to hold more of my money than is needed.

That is where I think the customer benefit becomes questionable.

The smart meter has benefited me practically because my gas meter is awkward to access. It has removed the need for me to physically read it. That part is useful.

But in terms of billing and Direct Debit control, I still do not see much benefit. The smart meter provides better data, but the payment model still seems built around keeping the supplier protected from debt, rather than giving the customer more direct control over paying for exactly what they have used.

So I take your explanation on board, but it does not really change my overall view. For me, the smart meter solved an access problem, not a billing or Direct Debit problem.

Hi Ben,

Thanks for the reply.

Yes, both meters are now working, and the main practical issue I originally had has been solved. I no longer have to climb up on a wall in all weathers to read the gas meter, which was the main reason I wanted the gas smart meter in the first place.

However, that still leaves my original question: what is the actual customer benefit beyond automatic readings?

I completely understand that some people prefer a fixed Direct Debit because it spreads the cost across the year. That is fine for customers who want that model.

My issue is that the smart meter itself has not really improved the Direct Debit side of things for me. The meter gives accurate readings, but the payment system still works around fixed monthly payments, account credit, annualised usage, and supplier-controlled calculations.

You say the extra money is still mine and is sitting in credit in my OVO account. I understand that, but from my point of view, I would rather that money stayed in my own bank account unless it is actually needed to pay for energy I have already used.

That is the part I do not see as a customer benefit. It may be convenient for OVO, and it may suit some customers, but it does not suit everyone.

I also understand that I could move to Simpler Energy and pay on demand, but then the unit rates are higher. So in practical terms, the customer is being pushed towards the fixed Direct Debit model if they want the better rates.

The other option, as you say, is to switch supplier if I want variable Direct Debit. That may well be the better answer once any exit fees or tariff differences are taken into account.

So, for me, the conclusion is still the same:

The smart meter solved an access problem because my gas meter was awkward to read.

It has not given me any meaningful improvement in Direct Debit control.

It has not made me feel that billing is more customer-led.

It mainly benefits the supplier by providing automatic readings and removing the need for manual meter reading.

I accept that some customers like the fixed Direct Debit system and credit buffer. I just do not think that should be presented as a clear customer benefit of having a smart meter, because in my experience the smart meter provides the data, but OVO’s payment model still decides how the customer is expected to pay.

First of all, I need to declare the fact that I am a data nerd. I keep daily records of my energy usage for each half hour period for both electricity and gas, the daily cost of each fuel use and the total daily cost (with and without VAT) as well as recording the lowest outside temperature for each day. I use electricity for everything except heating and hot water.

I have a tropical fish tank and am also a technology nerd with a vinyl/paper cutter, a 3-D printer, an electric glass fusing kiln and a recently acquired laser engraver/cutter. My half-hourly usage data allows me to work out, fairly accurately, how much each of these things cost me to run. Since my usage of these things (apart from the fish tank) varies from month to month, I CHOOSE to keep a “buffer amount” in my account (chosen by me! If OVO suggest I should lower my Direct Debit, I always resist.) The second reason for the “buffer” is that a few years ago, when our energy prices suddenly went crazy, I found myself spending every afternoon in bed in order to keep warm! I refuse to do this again. While my number of books read went up, the isolation was bad for me. I now keep the “buffer” to allow me to choose to be warm whenever I want/need to be. I am on a fixed income so having fixed outgoings works best for me. I also take advantage of fixed rates and any other initiatives such as the monthly prize draw to earn money off of my energy bills and the recent, weekly, 2 hour free electricity offer. These are possible because I have a smart meter. 

Going back to the advantage of being a data nerd. The OVO “Future annual consumption” that appears for each fuel on the “My plan” page of the website is misnamed. It actually shows the exact amount of each fuel I have used in the 365 days up to the end of yesterday. This is then used by OVO to predict what I will use in the coming 365 days. OVO use these amounts: the actual present cost of each fuel to me, including standing charges (Plus VAT) to work out what would be a sensible Direct Debit for me. They come up with a total cost, subtract any credit in my account, divide this by 12 to give a monthly amount, then add that to the total cost which they then divide by 12 again. I have a spreadsheet set up to do exactly the same calculations, If OVO did not add this one month credit buffer, today they would be telling me that a sensible Direct Debit would be: £79.  As you can see, their advice is that I should be paying a minimum of £85 which is almost exactly the amount my spreadsheet, using the OVO model, tells me it should be! (My spreadsheet suggests £85.32) I do not consider £6 per month worth worrying about! It would actually be a little over the average cost of one day’s fuel usage in January.

​@Bendog 👋 Have a look at your PMs when you have a moment.