177 MPs back Robert Halfon’s campaign on energy bills

Maybe Energy companies should be made to pay interest on any excess money of at least RPI %age rate. I’m sure they wouldn’t hold onto it for long then

I use the excess as a savings, I took 160 out earlier in year towards a new washer dryer,

energy ombudsman should help, I’m on eon and can get any overpay put back in my account in around 4 working days had 160 towards new washer in January,with no probs at all, very easy company to talk to ,and helpful. good luck.

terfar, agreed in principle. As I indicated above my question is simply what is a reasonable cost difference between direct debit and cheque/cash payments; someone (Ofgem) should look at this – it is not unreasonable for it to be different for different suppliers. The benefit is often given as a discount for those who pay by DD. Apart from the easier administration of DD, it also gives the supplier better security that they will be paid, and paid on time. That has value to them.

I agree with you. The exact cost is a little difficult to know (and I expect that the many companies don’t know either). It’s not just the simple 50p (or whatever) bank transaction charge, but the invisible costs such as sending out bills and processing the payment. But I doubt it is more than £2 or so per cheque.

I’m sure these companies don’t know the costs for anything and most of their fees are estimates. It’s like Coop Energy who make an identical standing charge for delivery of electricity and gas. The infrastructure for electricity and gas are totally different, so how they reach an identical charge is beyond my ken. I think it is committee guesswork, which I suspect is what they do for differences in billing costs.

On another Conversation we have had examples of debit card surcharges that are clearly well in excess of the small cost of processing transactions. I am not opposed in principle to SMALL differences in charges according to payment method, providing that they are an honest reflection of costs. The fairest way would be to have a national system that applies to all companies, to remove the possibility of exploiting customers.

As Which? has said before, making comparisons between energy supply companies is too complex.

It costs a lot more than you would expect to process cheques. In the past I have used a figure of £10 when calculating costs at financial services companies. You need to include the cost of reconciliations and bounced cheques. DD’s are handled entirely automatically so their cost is in the order of about 10p. So 4 cheques p.a. cost about £40 to process. Add in a profit margin (power companies don’t work for free) and £50 p.a. is entirely resonable.

If insufficient funds are available, a direct debit will fail in the same way as a cheque payment. I am not doubting that direct debit costs less than cheque transactions, but feel that a fair comparison should be made.

One thing that is clear is that those who default on payments increase the costs for everyone.

If these figures are correct and are widely applicable then we can begin to understand how the extra costs compare with what the energy companies charge (or discount). Only with facts can we assess these issues, and then decide if there needs to be a better way of dealing with them.

It would be good to see some more information about these costs. Energy companies do have the costs of those who pay late or default on payment. It is not just a case of comparing costs on the basis that everyone pays promptly.

In the old days when bills were sent and paid by post there were many who would invariably wait until the red final demand was received, even they had no shortage of money.

Lee, as you seem to be a very low energy user then Ebico might be your cheapest. You pay for lack of standing charge with high unit rates. So it is very expensive for many others. SSE (SE in my area) is not the cheapest supplier. It pays to use Which? Switch for your specific annual energy use to compare suppliers.

I agree total Malcolm I was talking to a friend who works for one of the big 6 last week and I admitted if Ebico/SSE went under I would need to start paying all these other fees most of you guys already pay.

Last year my total energy bill was £176. This year I am trying to get it to £52. So yep, I am a very very low energy user.

Beryl, you can ask your energy company to change your direct debit. As far as using the interest made on individuals excess accounts – the excess money should be refunded to the individuals. It would not be right to use money from a random group who have overpaid to subsidise others. Subsidy is the job of the state, out of taxes, and a levy paid to the energy companies for this purpose.

I have been home a lot in the past quarter and used more energy than usual, resulting in a debit of about £64 on my account. This resulted in prompt notification that my direct debit payment will rise by about 15%. No doubt I will be well in credit within the year. As Beryl says, it’s a win win situation for the energy companies.

I just want to pay for what energy I use – not overestimates and underestimates. A direct debit should make this easy.

Before switching to Scottish Power I frequently called e.on and they always took action when I complained about being substantially in credit. They would only do this automatically once a year. On other Conversations, it is clear that others have had difficulty in persuading e.on and other companies to take action regarding large credit balances.

I am able to stand up for my rights but I want energy companies to be fair to everyone, and without the constant struggle.

I’m with npower who offer three payment methods: cheque, card or cash on receipt of quarterly bill, monthly fixed direct debit (designed to even out payments through the year), and quarterly variable direct debit where your bank account is debited for the amount of energy you have used in the quarter. Sounds like this is what would suit you. The same direct debit discounts apply to both the latter methods.

“The excess money should be refunded go individuals “.

Yes I agree sorry if I failed to make myself clear but I was referring to the interest accrued and not the overestimated amount

Beryl, we are at slight cross purposes! I meant that excess money should not accrue in the first place, so interest would not be available to distribute.

Of course, the only final solution is for the Energy companies to fit Smart Meters in every home. Then they would be able to simply debit the exact sum every month.

However, there are downsides to even that solution. Providing the annual energy usage is correctly estimated, paying the same DD in 12 equal monthly payments is often more convenient for the householder because it spreads the cost across the year and simplifies budgeting. With a Smart meter, an unexpectedly cold December (and we had one recently) could result in the householder having a shocking bill immediately following an expensive Christmas!

So paying by DD benefits both the householder and the energy companies because both can predict their cash flow regardless of the vagaries in the weather. Yes, the householder will have big surplus balance at the start of Winter, but in an average year, this should balance out by the end of March. It is far from an exact science though because none of us can predict the weather more than saying it’s colder in winter than in summer! So far, despite the horrible weather, this winter has been mild and energy consumption has been ‘unseasonably’ low.

Malcolm – Thanks very much for the information about npower’s direct debit system. I’m on a fixed price contract at the moment but I will certainly look into this. I wonder why all energy companies don’t offer the same arrangement. Some people may find it helpful for budgeting purposes to have a fixed monthly payment but there are many like me who just want to pay for what energy they have used.

terfar, I agree. Even now, though, they could take it monthly for those prepared to submit meter readings. I am not sure about smart meters. Would they really be of much use showing people how much energy they are currently using? And there is a large up-front cost that the energy companies must bear – and that means we’ll pay. For the energy suppliers, there are substantial differences in the costs they pay for their energy at different times of the day. We currently only may benefit from this if on an economy tariff. However a smart meter could submit our energy usage daily, and at different times, so we could pay a number of different unit charges depending upon time and usage. For those savvy enough, and diligent enough, to use energy outside the peak times, savings could be made. However I doubt this would have much effect on heating – that is determined by your thermostat and timer – no point in having it on at cheap times if you don’t need it. Electricity for cooking – change your meal times? So I think they could be a waste of time. However, I’m sure someone will know better!

I think if the system was in-place to-do it monthly it would help people cut down too. As if they used say £45’s worth and it was too much, the following month they would try and use less and maybe try and have a bill of £35 or £40 and saving money too.

I don’t mean to bang on about myself, but this is why I take my readings weekly. So if i have had a bad week the following week I try harder.

PS: I know this is off topic a bit, sorry Patrick, feel free to send me abuse :p

Robert Halfon has helpfully provided a link to the information behind his introduction. http://www.scribd.com/doc/198454928/The-Great-Energy-Rip-Off?secret_password=26fobxl8umjpu54njfg9
If this does not work, it can be accessed through his blog site http://www.roberthalfonblog.com/2014/02/04/my-house-of-commons-debate-today/.
The average discount is around £70-£90 a year for dual fuels. An exception is £390 for Spark Energy! Some suppliers do not make a distinction – the extra cost and risk of payment by cheque or cash presumable being spread across all users. Ofgem claim to monitor and expect charges to reflect actual cost. It would be useful for them to tell us how they assess whether costs are reasonable or not and their criteria for taking action.

Malcolm, people using direct debit tend to be the more privileged in society who receive a high regular income, have access to a decent bank account, the internet etc. You seem to suggest that more vulnerable consumers should indeed pay higher bills as a result of their vulnerability (unemployed, elderly, single parents, poor health… the list goes on). We should be aiming for a more egalitarian society, not one that creates greater polarisation between the haves and have-nots.

Pootle, That is not what I am saying at all. I am suggesting that energy companies should charge on the basis of its cost. If we feel as a society that some are genuinely disadvanbtaged by this then society should provide assistance – that is what welfare paid for by taxes is for. 50% of people, approximately, do not pay by direct debit. These are not all vulnerable, not all without bank accounts; many will have chosen not to do so, or not got round to it. They have a choice.

Customers who can pay in advance, or immediately on demand, or by automatic process, or by variable debit from their bank, or by any combination thereof, enable companies to lower their cost base overall which benefits everybody. Entering into these arrangements is not without its costs and drawbacks so a reciprocal advantage is appropriate. It’s splitting hairs I know, but I would not say that “more vulnerable consumers pay higher bills” for their energy or telephone service but I do agree that they are charged for using a method of settling their account that is more expensive and less convenient for the supplier. I suggest that equality of treatment is only applicable when equality of practice prevails. As Malcolm has rightly said, it is the duty of government to look after the vulnerable and either supplement their means or relieve their outgoings as appropriate. Just because it doesn’t do this to everyone’s satisfaction doesn’t mean we should then distort the utility markets; there’s enough social obligation loaded onto the energy and telecom markets already adding to the cost of a necessity for the poorest in society [and to add insult to injury, where these impositions are incorporated in unit prices and standing charges, VAT is payable on top!].

I don’t pay by direct debit. But that’s NOT because I’m poor or vulnerable etc. I just like to make card payments that’s all.

Beryl, the key is to have accurate information. I have been pressing for this – only with facts can we have a proper debate. If the energy companies make a genuine profit – over time – of around 5% that to me is quite acceptable. Shareholders – including many people on pensions – put their money into enterprises that make them an acceptable return; poor performers will simply lose investment. I am not expecting the government to bale out energy companies; I expect government to help those individuals directly who are genuinely in need. We pay taxes to allow them to do this. I don’t want to pay extra to the energy companies so they can take on this role. As far as truth is concerned, this is what Ofgem should be providing.

Skeptic, clearly you have chosen to have your contract with a particular supplier for your own reasons. I am with npower and as I posted earlier, you get the same DD discount whether you pay monthly (fixed direct debit) or quarterly (for the amount of energy you have used). Might be worth a look? It is worthwhile submitting your meter readings monthly so there is less opportunity to be overcharged on a monthly DD.

Removing every member of the board and banning them from holding similar positions ever again would be top of my list.