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U
Rank 4
userJP
Rank 4
October 14, 2023
Solved

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

  • October 14, 2023
  • 30 replies
  • 2920 views

I live in a small flat. My current direct debit has been set at £110 for several months, which (at current rates) is comfortably higher than it needs to be. In fact, just three weeks ago (23 September) OVO was urging me to lower it to £87:

 

 

Today, however, (14 October) I logged in to find OVO recommending £108 instead:

 

To be clear, there has been no change in my (OVO-estimated) Future Annual Consumption, nor have any actual readings been submitted in the past three weeks. The sole reason for the difference is that the earlier recommendation was based upon anticipated usage up to 23 September 2024, whereas today’s figure is based upon how much OVO expects me to use by 31 March.

If minimum direct debits are to be calculated on a 6-monthly basis from now on, customers are going to be faced with high direct debits over the winter and lower direct debits over the summer. We’ve been told that the great benefit of direct debit is having a payment which smooths out seasonal differences. Well, there goes that argument.

Thankfully I’ll not have to increase my direct debit this time around, but I feel for those customers who will face a minimum payment hike going into winter as a direct result of this new method of calculation. Somebody please reassure me it’s just a glitch.

Best answer by MCH59

Updated on 27/08/25 by Abby_OVO

 

How does OVO work out my monthly Direct Debit?

 

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.

 

It’s important you have all the info, then you can decide what’s best for you.

  • If you request a refund online, sometimes we’ll need to confirm this over the phone. This is to make sure you have the details of how it’ll affect your energy account.

  • Getting a refund might mean your Direct Debit payments will need to increase, once your account has less credit in it.

 

 

We’ve got some really helpful topics all about Direct Debits that may be useful here:

 

 

 

Hi @userJP 

As you have spotted, the Direct Debit calculator changed earlier this week. If you are on a fixed plan, the calculations takes you to the end of your contract and, if you are on the variable Simpler plan, it will now calculate to the end of March 2024.

There is some logic to revolving it around March, because that is when the average consumer who is paying the same amount, month after month, would generally be expected to have their lowest balance (ie around zero if you they are paying the suggested amount) before starting to build up a credit balance through spring, summer and early autumn. 

I THINK it will still work it out over 12 months, but now everyone’s 12 months starts on 1st April.

I haven’t really had a chance to test it yet, but at first glance, 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 . .. but that is subject to testing and I could be entirely wrong about that

In my case it reduced the minimum payment by almost 10%. although that makes no difference to me because I deliberately pay more. than the suggested. for peace of mind in winter. 

 

30 replies

Show previous replies
M
Rank 7
MCH59
October 15, 2023

@Nukecad

I wouldn't say that the 13th month stuff was at all sneaky; BUT it was problematic in that it self-evidently wasn't working as per the explanatory note on how the Direct Debit Calculator arrived at the suggested payment amount.

 

U
Rank 4
userJPAuthor
Rank 4
October 15, 2023

 

@Blastoise186

Just so I’m absolutely clear in my own mind about all of this…

From screenshot #1, my required minimum payment (calculated on the basis of my expected annual energy costs) was £87 before OVO’s system change.

From screenshot #2, my new increased minimum payment (calculated on the basis of my expected costs over the next six months only - i.e. autumn & winter) is going to be £108 between now and the end of March.

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?

 

If the answer to the above is “yes”, then it follows that my minimum payment over the next 12 months will increase from (12 x £87) = £1044 to (6 x £108) + (6 x £87) = £1179. Yet £1044 remains OVO’s estimate of the costs I am likely to incur over this period.

In other words, my direct debit is going to be set so that I shall have no option other than to pay £135 by way of direct debit over and above my estimated actual usage for the next 12 months.

There are going to be people who will find themselves in financial difficulty this winter as a result of this new obligation to deposit funds with OVO in excess of their annual estimated costs. I am struggling to understand how that can be fair. Particularly when it was introduced without warning.

M
Rank 7
MCH59
October 15, 2023

@userJP

Bearing in mind that the old Direct Debit Calculator didn't actually work as advertised ..… and that this only affects customers on the Simpler variable tariff paying by direct debit.

IF it does indeed work like that, then there will certainly be customers in the same boat and there will be just as many who will see an equally significant drop in payments ... and two thirds of  customers will have a relatively minor movement either way.

Counterintuitive as it may seem, the people who are likely to struggle with that sort of change are already far less likely to be paying by direct debit on a variable tariff and a significant number will also have a £300 DWP cold weather payment arriving between now and the middle of November.

Let's not jump to conclusions though, because I think @Blastoise186 was referring to my explanation about every Simply customer being put on the same standard cycle, rather than the specifics of the resulting Direct Debit calculation.

    U
    Rank 4
    userJPAuthor
    Rank 4
    October 15, 2023

    If the answer to the above is “yes”, then it follows that my minimum payment over the next 12 months will increase from (12 x £87) = £1044 to (6 x £108) + (6 x £87) = £1179.

     

    Make that £1170, not £1179, sorry. 🙄  So a difference of £126, not £135. It’s confusing enough as it is without my having to add arithmetical errors to the mix.

    U
    Rank 4
    userJPAuthor
    Rank 4
    October 15, 2023

    @MCH59

    I think the basic point irking me is that I feel it is wrong in principle for OVO to require even one of its customers to make minimum payments over a 12-month period which, when added up, exceed that customer’s predicted annual costs. And it seems that is going to be the situation in my case, at least.

    Firedog
    Super User
    FiredogSuper User
    Super User
    October 16, 2023

    The new system hasn’t been in operation long enough for me to work out just how it works, but I’d just say that there are a couple of backstage pages at account.ovoenergy.com that show some of the figures used to populate the web pages. You might like to have a look and see if you can make sense of the JSON.

    The old system, giving also the 13 monthly figures:
    smartpaymapi.ovoenergy.com/pace/recommended-dds/v1/1234567/projected-costs?limitNextYear=true
    The basis for calculating the monthly estimates is at the end of the page.

    The new 31 March system:
    smartpaymapi.ovoenergy.com/pace/recommended-dds/v1/1234567/recommended-direct-debit

    (In both cases, replace 1234567 in the URL with your actual account no.)

    To access them, open a browser window and sign in to account.ovoenergy.com. Then open a new tab and paste the URL into the address bar there. Beware: the access token created when you sign in expires after 30 minutes, so if you see an error, revisit the account page and sign in again to store a new token. 

     

    I’d also point out that DD customers are contractually obliged to maintain a credit balance on their account. This is clearly not strictly enforced so long as the customer keeps his nose reasonably clean, but I suppose it could be invoked against customers who refuse to toe the line. 

    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 | It may look as if I know what I’m talking about, but don’t let that fool you. |
      U
      Rank 4
      userJPAuthor
      Rank 4
      October 16, 2023

      I’d also point out that DD customers are contractually obliged to maintain a credit balance on their account. This is clearly not strictly enforced so long as the customer keeps his nose reasonably clean, but I suppose it could be invoked against customers who refuse to toe the line. 

       

      Thanks for linking to the terms & conditions @Firedog. It seems the contractual term relating to my specific concern on this thread is also under clause 7.11 - this one here:

      “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).

      I’m not seeing anything in the T&C’s about the 31st of March supplanting the contract anniversary as the “zero balance” date for direct debit calculation. And if such a contractual change were to be introduced, I’d expect reasonable notice to be given in terms of clause 9.2.

       

      M
      Rank 7
      MCH59
      October 16, 2023

       

      @userJP

      I totally get what is irking you, BUT read that paragraph from the T&Cs again. 

      It doesn't actually say that the contract anniversary is the zero balance date .. it just says that you won't end up in debt by the anniversary.

      "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“

      If a customer is paying the minimum amount when 31st of March is used as the lowest credit balance date, then that same customer, who is making the minimum suggested payment, will not be in debt on the contract anniversary date either.

       

        Jeffus
        Rank 20
        Jeffus
        Rank 20
        October 16, 2023

        Some updated wording provided by OVO on positive and negative balances 

        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.

        We aim to get your balance to a healthy level by the end of winter (31 March), or the end of your contract if you're on a fixed plan.

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

          U
          Rank 4
          userJPAuthor
          Rank 4
          October 16, 2023

          Some updated wording provided by OVO on positive and negative balances 

          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.

          We aim to get your balance to a healthy level by the end of winter (31 March), or the end of your contract if you're on a fixed plan.

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

           

          And this is how it used to look:

          https://web.archive.org/web/20230821113440/https://www.ovoenergy.com/help/article/how-your-account-balance-works

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