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Why has there been a sudden increase in direct debit amount on our 2 year fixed plan?

L
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We renewed our OVO energy contract just 2 months ago to the 2 yr fixed price plan. Having been customers of OVO for several years they had lots of info on our energy consumption. The offer of a two year fix at £118 per month seemed too good to be true since we had been paying £140 per month. I queried the amount several times when we signed up but was assured that £118 would cover our costs. Today, just two months into our contract we have been advised to increase our monthly payment to £128. Whilst we have probably used more gas in the last 2 months than last year due to the cold winter, it seems incredibly quick to make us start to pay more. A good summer could soon reduce our gas bills! I fear it's as we thought - a low offer to tempt us to renew our contract and then bump up our monthly payment.

Has this happened to anyone else? And how did you deal with it? Sit it out hoping your consumption would even out over the year, or increase your payments?

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Best answer by Transparent 23 April 2018, 18:12

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Transparent
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Updated on 26/06/23 by Abby_OVO

 

Welcome to the OVO online community - great first question to ask about the increase you’re seeing to your recommended Direct Debit amount.

 

How do you calculate my Direct Debit when I first join?
 

When you switch to us, we’ll use your annual usage figures to calculate how much your energy will cost over the year. Once we’ve got the annual amount, we’ll divide this into 12 - this will give us the Direct Debit amount.

You should be able to find out your usage figures from your previous supplier but not to worry if you can’t, we’ll use the national averages. You’ll see a recommended Direct Debit amount recalculated with each monthly summary. If you’ve moved in to an house we supply, we might also use previous usage data for your new home to help suggest a suitable starting figure. Either way this initial Direct Debit amount isn’t fixed, even if your price per unit won’t increase on your current plan. As the amount you use may change, we’ll regularly check that the payment amount is enough to cover your energy costs and leave you with a clear balance at the end of your plan. Check out the video below for a quick run-though of this process:

 

 

 

My contract is ‘fixed’, so why has my Direct Debit amount changed?


The tariff rates quoted on our website (and your welcome letter) are fixed. This is the price per unit of energy you use (in kWh). What might change is the Direct Debit amount. We regularly check your direct debit amount against your usage costs. If your usage is higher than we expected when you joined us, we’ll let you know and increase it to make sure your account doesn’t fall into debt.


 

Is there any support available if I’m struggling to pay for my energy?

 

There is help available if you’re struggling to pay your energy bills – both from us here at OVO Energy and from government schemes and charities as well.  There are many ways we can help – such as setting up a payment plan for you, which spreads the cost of your energy to make it more manageable. If you want to find out about payment plans, you can request one online here – we’ll take you through what you need to do, and ask you for some details. Our dedicated team is also specially trained to support you. They can make sure you’re receiving any financial assistance from the government that you’re eligible for, and take you through payment support schemes that are available. 

 

You can find out more about these schemes and where to seek free, independent advice right here.

 

What can I do to help manage my energy?

 

As your recommended Direct Debit amount will be based on your energy usage, here’s some information that might help, when it comes to managing your energy account.  It’s easiest to manage all this through your online account. If you don’t have one you can set one up here.

 

  • Sending regular meter readings. Without meter readings, we have to estimate your bills and this can mean they aren’t 100% accurate. You could be paying too much or too little for your energy. To stay up to date, submit your readings here if you’ve got a traditional meter. 
  • Getting a smart meter. Smart meters send readings for you, which means we know exactly how much energy you’re using – so your energy account is always up to date. They can also help you track your energy use in real-time. You can book your free appointment to get one installed here. 
  • The Centre for Sustainable Energy can give you free, impartial advice on saving energy. Just visit cse.org.uk/ovoboost

 

 

Save energy... recycle electrons!
L
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Thanks. Still feel slightly miffed since OVO continue to forecast our annual costs as 12 X £118! Think I'll let it run a bit and see what happens.
S
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The odd thing is that the predicted monthly price you are shown when being offered a fixed price tariff is the cost for a typical 'medium user' household - your actual historical usage data is not used. So, if you're actually a slightly heavier or lighter user this is not taken into account. It's a bit of a hassle but I always look at my previous year's consumption and do a monthly cost calculation based on the new tariff and the historical usage, and set my direct debit at around that level.

I find it odd that with all the historical usage data Ovo has for me, the estimated monthly cost figure is not personalised to me. I don't find their method of calculating my estimated usage costs very helpful, but I guess the methodology is set by Ofgem perhaps? If they have my data, I don't see why they couldn't also show me a figure alongside the estimated one, based on my actual previous year's usage - this would be very helpful to me.
1
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My direct debit has recently increased, but the amount of energy in 2019 was lower than in 2018. This cannot be due to an increase in energy prices as I have 2 year fix.
Eva_OVO
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Userlevel 5
I've moved your query over here, @100425629, take a look at the best answer for more help with this.
My friend told me how electricity is measured and I was like Watt!
Transparent
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Hi @100425629. The Direct Debit calculator page is the place to check the figures. If the calculator does indeed show that the assessment is markedly wrong, then contact Customer Support.
Save energy... recycle electrons!
G
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We are just finishing on a two year fixed tariff for electricity only at £78 a month (we are in a flat). I looked at the tariffs just a week ago and was quoted £90. I have now been quoted £117. Thats a 50% increase on my current tarif!

How can that be justified given that I am still in credit.

L
Rank

I let my fix run the 2 years at the original direct debit amount and ended up around £400 in credit. Now have a quote for a new two year fix just £1 per month higher. Seems reasonable but gas prices have reduced substantially and my quote has only a small reduction in the gas element. Based on my credit I would have expected a lower direct debit prediction. When I did a comparison with other energy companies I found quite large savings could be made. A large part of the saving being due to significantly lower standing charges for both gas and electric. Have others done comparisons with same outcome? We are mulling over whether to make a switch.

Amy_OVO
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Userlevel 6

Hey @GEMinStur and @Llandaffian ,

Your renewal quote is based on your estimated annual consumption figures and the new rates available.

There has been a price increase compared to the rates you were fixed into. When a fixed plan ends you are given the new rates available in line with the market price. 

The amount of credit on your account has no impact on the unit rates we offer for a renewal to our customers, you’re free to request a refund for your excess credit, that being said if you have enough excess credit you could use that to make up the extra recommended in the new quote. 

Hope this helps! 

OVO-Joyed to help!
L
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Doesn’t really explain either the reduction in gas price or why standing charges are high compared to other companies quotes on a comparison website. Makes me wonder whether OVO quotes a lower standing charge if you want to switch from another company to them?

Amy_OVO
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Userlevel 6

We price inline with the market, @Llandaffian. 

Our standing charges are a true reflection of the industry costs incurred to transport and maintain the gas and electricity supply which goes to our customers homes. Other suppliers may integrate a large amount of these costs into unit rates instead of having a separate standing charge, or run at a loss-leading rate subsidised by the higher non-contract rates paid by more long standing customers - often those who are less likely to switch. We review our prices on a regular basis and have been just as quick to drop our prices in the past when we have seen decreases in commodity cost.

We don’t offer different rates based on tenure. 

Thanks! 

OVO-Joyed to help!
Transparent
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Hi @Llandaffian - interesting observations.

@GEMinStur  I think there’s a fair amount of fluctuation in OVO’s tariffs. I checked several times in November 2019 when my 2-year Fixed Tariff was shortly due for renewal. On the day I actually decided to renew, the 1-year Fixed Tariff had remained where it had been the previous week, but the 2-year Fixed had decreased significantly.

Well, you can guess which one I opted for!

I’m actually looking forward to the day when OVO’ eventually offer a half-hour variable tariff. One of the current problems with such a tariff is that the Network-Charge for electricity stays static regardless of the time of day or what extent of the grid my electricity has used.

As I live in an area with a surplus of renewable energy, I don’t think I should be paying a levy to National Grid for electricity which has never passed across their cables!

There are quite technical reasons why this is difficult to change, but it is a subject which I discussed with my MP in December. So if the Energy Industry doesn’t start making progress to resolve the issue, then I think they’ll find Parliament putting them under pressure!

 

Save energy... recycle electrons!
I
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I recently changed my tariff to a new 2 year fixed tariff in mid-August, at which point it said “by the way, your direct debit needs to be increased, here’s your recommended amount”.  I’ve checked over the electric projection, compared it to last year’s consumption and calculated it using the new tariff figures (the joys of Excel) and I don’t have a problem with that.  Prices go up, you need to pay more, deal with it muchacho.  

The gas projection though seems to include an estimated figure for when my supplies were migrated over from SSE.  I did think it was odd at the time that my old tariff and recommended DD amount was £5 per month (oh, how I wish!) but is it possible that the projection calculator’s being affected by this and giving a false recommendation?  

Jeffus
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Hi @IMac1979 

I don't work for OVO i am just a customer like you. Some of us post from time to time if we think we can help. 

The direct debit debit calculator on this page

https://account.ovoenergy.com/payments/direct-debit/calculator

uses the Future Annual Consumption Figures on this page on the website not the app. 

https://account.ovoenergy.com/plan

For some ex SSE customers the Future Annual Consumption figures were not pre populated with particularly accurate figures. The system will auto adjust over time, but it will take some time. You are lucky if your Future Annual Consumption Figures are too low, it is more of an issue if they are too high. 

The Direct Debit calculator takes into account any credit balance you have, but doesn't take into account the government £400 grant as OVO will pay that directly to your bank account over 6 months.

So yes, if the Future Annual Consumption figure looks too low then manually adjust your Direct Debit to something reasonable for now.

Does that make sense and help? 

I
Rank

Okay.  So I’m currently waiting on hold - after being lied to by the smarmy IVR man that I’d be on hold for “less than five minutes” (twenty minutes, mate, twenty minutes and counting) - and I know OVO have royally screwed this up.

My projection figures are based on estimates.  How do I know this?  Because the figure they’ve used is something more akin to the national average and unfortunately  for OVO I know how to work out precisely how much I’ve used over a year and calculate the gas kWh and the projection figures (helps if you worked for SSE, btw).  My future usage should not be as high as OVO thinks it will be.  

Now just to get to someone first thing on a Saturday morning and deal with the awful IVR music...

K
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Why is OVO increasing my direct debit saying my charges will be going up even though I’m on a fixed rate.

K
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When is a fixed rate just a variable rate under another name when you join OVO

M
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Without the context we cannot answer you.  We’re mainly just other interested members of the public but strangely enough we can’t read minds, so don’t know the background to your question.

Eon and EDF customer. Don't think smart meters are worth the expense.
M
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is it possible your fixed rate is ending and so you’ll move onto another tariff at higher prices, or have you used more energy than previously forecast?

 

A fixed rate fixes the prices but it doesn’t cap your energy use in any way - you still have to pay proportionately to your consumption.

Eon and EDF customer. Don't think smart meters are worth the expense.
K
Rank

I just took out my fixed rate 1 month ago. Sent 1 lot  of meter reading how can they tell anything from that. Just want to put direct debt up to make more money.

M
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Badge +1

Fixed rate deals look forward across likely future energy prices, and will be set at prices unimaginable 18 months ago.  Tomorrow  (8 Sep 22) the government will announce its plan for solving the energy price crisis, and it's almost certain that it will be beneficial for most people on fixed price deals to abandon them and go back to variable prices.

OVO will be using your historical consumption data as a basis for the future - but as I said above its likely that you might need to revert to the variable tariff.

Eon and EDF customer. Don't think smart meters are worth the expense.
K
Rank

They have done it to me too jumped me from £70 a month to £261. Even with my  consistent usage amounts they just want to hold on to are money for a few months then we are allowed to ask for it back apparently with a refund request how ever long that takes......

M
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Badge +1

A fixed direct debit averages your bills over an extended period  -say 12 months.  If you period starts in the summer when your bills are low, then you will build up a credit.  that credit will then gradually disappear in the winter months when your bills are much higher.

 

So the best time to start a DD is in December - then your account will be in debit for most of the 12 months.  But its not a scam to rob you of your money.

Eon and EDF customer. Don't think smart meters are worth the expense.
Emmanuelle_OVO
Rank
Userlevel 7

Hey @K9eagles,

 

I’m sorry for the issues you’ve been having.

 

A fixed rate plan means the unit rates (the price per kWh of energy you use) and the daily standing charge you pay are fixed for the length of the contract.

 

If you were a new customer of OVO when you sign up you will be asked for your estimated annual consumption figures in kWhs for gas and electricity. If you didn’t give these, your quote would have been based on less specific information such as the type of property, how many people live there and whether energy is used all day or evenings and weekends. 

 

The direct debit isn’t fixed, it is regularly reviewed and as it is based on usage, if your usage is higher we’ll get in touch to let you know to increase it.

 

Here is a helpful guide which explains more about the direct debit review process:

 

 

There is a really great tool on your online account which will show you exactly how your direct debit has been calculated. We’ve built a tutorial on how to make the most of this tool. 

 

Energy prices are rising at the moment and we have lots of support available for our customers. 

 

I hope this helps. 

Renewable Energy? Big Fan.

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