Paying for more than I'm using every month - energy

[Celia24]

I lived abroad for years and haven't got my head around how it works here again in the UK.

My direct debit for Bulb every month is £115. Last month I used only £90 of energy and this month only £85. But I will still pay 115. This seems ludicrous but I feel I'm probably missing something about how it works.

I inherited the energy account from previous tenant and there is now over £200 in credit on it. I feel a bit lost about how it all works and would appreciate any insight or good resources!

Generally your dd will be an estimate of your yearly usage divided by 12. So you pay the same each month but your bill doesn’t hike right up in the winter

I also have a smart meter, don't know if worth mentioning or makes a difference

Bulb doesn't charge more for those on variable monthly DDs/doesn't offer a discount for those on a regular-amount DD, so you might as well switch to a variable DD with them and just pay the actual monthly usage.

Are you saying you also inherited credit from the previous tenant? Usually when one tenant moves out, the account is closed and the new person sets up a new account.

Our supplier estimates our annual use and the cost and divides it by 12 so we pay the same each month. We use significantly less in summer so go into credit with them but that's gobbled up with extra use in winter.

This year we have the same situation except that winter charges are going to increase a lot so I expect they will advise a changed monthly payment soon.

I believe we can put in regular readings and they take the correct amount. We may have to do that but it does make winter payments more worrying as its not spread.

As pp said it’s normal to have a credit in the summer, as you’ll use more in the winter so can spread the cost throughout the year.

Putting aside price rises for a moment. Youre building credit up for winter, so now you pay £115 but only use £85, but in winter you might use £130 but still pay £115 because you have credit Iyswim.

However, with prices going up, your payments will increase, but if you have enough credit, hopefully not by as much as they would have.

so you might as well variable DD with them and just pay the actual monthly usage.

This is crap advice imo.

@MrsRobinsonsHandprints why? There's nothing to indicate OP has cash management or cashflow problems, and if she doesn't, there's absolutely no benefit to the 'extra' money being in her account at Bulb (which even has several months' credit) rather than in her own bank account. Why should she be giving Bulb, by the way a company with serious enough money problems to end up in special administration, a free loan? Why should she be giving such a loan to even a company that was in good financial standing?

Are you on a fixed or variable tariff? This is important. If variable your costs for usage will increase by approx 80% from October 1st. Also your usage is likely to be pretty low at the moment compared to when it starts getting colder and you need your heating on. Your current monthly Direct Debit amount therefore actually sounds a little low considering these upcoming increases. However if you are £400 in credit (are you sure that’s your credit) then there is already a nice buffer and, with also considering the upcoming £67 per month Government help (also starting October for 6 months) I would say you are pretty much spot-on. I definitely wouldn’t be looking at reducing your DD. However, if your energy company suggests an increased amount, unless it is ridiculously high and unaffordable, I would accept it. They are ensuring you don’t go into debt. At the moment you are in the ‘making hay while the sun shines’ period. 😉 HTH x

That sounds about right. I don’t use the gas central heating, often have cold food, have lights on less (because it gets dark later and is brighter) and don’t use my electric fan heater in summer. My direct debit is probably two or three times what I actually use.

Come winter, heating goes on, lights are on all day and I want hot food to warm up - I end up using far more than my direct debit. I usually go into the winter with a large credit which gets used up over the winter before building up again next Spring / Summer. If done right, it means you can budget the same amount each month.

I’m concerned you say you inherited the account. That isn’t supposed to happen. The previous tenant should have closed their account and you started a new one when you moved in.