Solved

Why such a large increase to my recommended Direct Debit?

  • 1 February 2018
  • 86 replies
  • 7397 views


Show first post

86 replies

Hi @Blastoise186 

Thanks for your reply. I don’t understand why you would keep £240 in credit to line Ovo’s pockets instead of your own.

I’m not willing to pay way more than I need to and certainly not for electricity I haven’t used. Obviously I know the cost of electricity has increased but with a smart meter, it’s easy to keep an eye on what I’m using and increase my payments as and when it becomes necessary.

I don’t use much more during the winter; I don’t use my storage heaters because they’re rubbish so I don’t need to build up an amount of credit to cover me through the winter months.

What is a ‘reasonable amount’ of credit (at the end of the contract)? 

 

Userlevel 7
Badge +1

OVO aims to get you to be just above zero at the end of the contract if you’re on fixed rate. On variable rate, that doesn’t apply but you’re usually just paying on-demand anyway so it doesn’t apply.

I have my reasons for being in permanent credit. Firstly, it forces OVO’s system to keep my minimum Direct Debit well below what I want to pay and gives me even more flexibility. It’s also because I still get the OVO Interest Reward under a grandfather rule, but it’s no longer available these days. In short, rather than OVO getting interest from my credit balance, I get it instead at a pretty healthy rate. Beats just about any savings account on the market, that’s for sure!

Most of my credit is also the Warm Home Discount for which I didn’t actually pay it in myself - OVO did as part of the WHD Scheme. As such, I made a personal decision to leave that credit in my OVO account for the time being, since it is intended ideally for paying energy bills with.

Once OVO has learned your actual usage patterns, you can be sure that the forecast will drop and allow your payments to go down. If they see you’ve got your storage heaters completely shut down permanently, that’ll also contribute to the number crunching and is factored into the payments.

It’s also a way of me testing if the billing platform really is working properly. Given my unique circumstances, if it tried to increase my payments before October 2023 despite my usage not changing, I’d know something’s up. Alas, that hasn’t happened and currently, it’s correctly predicting a drop.

I’ve looked at the calculator. It is ‘calculating’ that I’m going to use £80 worth of electricity in July and in August, £90 is September and £120 in December and in January. I just don’t agree with that but like I said before, as soon as I see that my DD isn’t covering what I’m using, I’ll increase it.

I think my main point is that I only want to pay for the electricity I’m actually using and right now, my £60 is more than enough.

Userlevel 7
Badge +1

I’m afraid that’s not how a fixed rate tariff works though - only variable rate tariffs allow you to do that.

With a variable rate tariff (aka Standard Variable) like OVO’s Simpler Energy tariff, you pay the bill on-demand for the exact amount you owe during that billing period.

For a fixed rate tariff however, such as OVO’s Better Energy tariff, you pay equal instalments throughout the contract into the account so that the total cost is spread through the entire term. You still only pay the exact amount you owe each month on each bill, but it comes out of the account credit you hold with OVO as a result of your monthly payments.

If you want to pay on-demand, your only option is to move to a variable rate tariff.

Well folks you increased my DD again from £147 - £168 for no reason I can see at all, actual bills are always less than £100 a month and now I am

almost £300 in credit with projected positive balance of over £1000 by year end - it is scandalous that you suggested I increase from £147-£168 which I ignored because it did not make sense - but despite this you increased it anyway - I am currently £288 in credit with June usage so far set at £44, so my balance at the end of June is likely to be £400 in credit - I knew your calculations did not make sense when I made my first post, we don’t use electricity for anything more than water pump in the gas central heating and tv etc 

Ofgem are launching a review

https://www.bbc.co.uk/news/business-61860717

‘Ofgem accused some firms of using customers' accumulated credit like an "interest-free company credit card".’

Userlevel 7
Badge +1

It’s worth mentioning that OVO’s calculations are rarely based on a calendar year i.e. January → December, but in actual fact are based on the plan you’re on.

If you’re on a fixed rate deal, OVO’s calculator targets getting you just about £0 at the end of your contract. If you have a two (or even three) year fixed deal, this could result in any of the calculations you mentioned doing yourself being inaccurate or unreliable because the system is looking much further ahead than you are.

If you’re on Variable Rate i.e. Simpler Energy, the system calculates based off of your plan anniversary, which is defined as the date you signed up (or possibly changed to Simpler Energy in some cases). Again, this is not a January → December thing. In this case, the system tries to make sure you’re in no more than £50 debit by the plan anniversary if you’re paying by Direct Debit.

OVO is allowed to do this and Ofgem will probably factor that into all the compliance reviews.

I’d also like to remind you that the most widely known Ofgem Default Tariff Cap is NOT the de facto price cap for absolutely everyone. It’s a national average and the actual price cap varies by several factors, not least by where you are in the UK. Please don’t rely on your calculations being accurate for variable rate beyond October 2022, because they probably won’t be!

The best fix to this problem is the simplest. If you have a Smart Meter, try setting it to Daily or Half-Hourly mode for at least six months. The extra data will train the system to make your bills and payments even more accurate - and will likely result in your Direct Debits more closely matching what you desire.

If you don’t have one yet, now might be a good time to get one. Otherwise, for the next six months please try to at least submit a weekly meter reading. More data = more accurate Direct Debit calculations! :)

I’m on a variable rate and by their own calculations I will be in positive ground by £1103 - we have a smart meter this is why the charge is nonsense - they are now suggesting a £76 per month direct debit down by almost £100

 

Userlevel 7
Badge +1

In that case, feel free to drop your payments down to whatever you feel happy with as long as it’s at least £77 (I’d probably go to at least £85 if it were me though). The system will allow you to do that on the spot, but it may take a few days to fully process with the bank.

Yes but they should not have put it up from £147 to £168 for no reason at all - when we were already in credit - I will wait to see what OVO do, they are supposed to review DD every three months if they have reviewed mine they have failed to act, it seems ofgem are correct in claiming some energy firms are treating customers like interest free credit 

Userlevel 7
Badge +1

That’s a discussion for you to have with OVO. Tbh I think it makes sense that the review process doesn’t instantly drop your payments every single time - but instead allows you to drop them. Ultimately, OVO will drop them if the system is sufficiently confident that it can do so safely, but ultimately it’s not as simple as it might first seem!

Reply