Utility bills - why do we have to pay so much in advance?

[strangeandfamiliar]

Just a rant really - as usual consumers are powerless about this sort of thing. I've just had a look at my Ovo account for combined gas and electricity. I have to pay £285 a month and as usual am hundreds of pounds in credit. Last month (as always in the summer) the actual bill was about £70, most of which was standing charges. At one point a couple of years ago I was about £1200 in credit and had to submit a complaint to get some of it refunded as they initially refused. I have no idea why utility companies are allowed to operate in this way. We have never been in arrears, own the house, have been here a decade, and have no trouble paying other bills, which we only have to pay when they are due and for the amount actually used/owed- such as mortgage, council tax, mobile phones etc. I'm fortunate in that for us the DD is easily affordable - but if I was struggling or on a limited budget it would be really detrimental for such large sums to be taken in advance and just be sitting there in Ovo's coffers 'in case' of large winter bills. I can manage my own money, thank you very much. How has this become the norm? (I know I could contact them to try to get my DD lowered and get some of the credit refunded, but why on earth should I have to do all that?)

You know what your usage in KWh is from your billing history - assuming you read your meter regularly. If you don't, start doing so, in order that your billing is based on actual and not estimated usage.

Then you can take the ACTUAL annual usage, work out the cost based on your tariff, divide by 12 and set your direct debit to that. If they insist you can argue with the facts and figures and refuse to let them hold onto your credit.

I'm in exactly the same position as @Spacie. I used to pay the same amount each month when prices weren't astronomical. When my provider went bust I was sent to Shell, and then eventually Octopus. Variable DD and no requirement for a smart meter. Don't know if this is a requirement if you choose.

I save an extra £20 a week throughout the year to cover larger winter costs if needed.

I moved from EDF for that very reason. We were £300+ in credit and they wanted to hike my dd up by £50 odd a month.
Moved to Octopus.

My understanding is that providers don't /have/ to offer variable DD. They do have to offer "a wide choice of payment methods" per condition 27.1 of the Standard conditions of gas supply licence (https://epr.ofgem.gov.uk//Content/Documents/Gas%20supply%20standard%20licence%20conditions%20consolidated%20-%20Current%20Version.pdf) but the only methods that they "must include" are payment by cash (meaning on receipt) and pre-payment. Arguably three options (pre-payment, on receipt, and fixed DD) do not a wide choice make.

Has your supplier explicitly said that they don't allow variable DD or just not mentioned it as an option? I have a variable DD with Octopus, yet Octopus doesn't list it on its page on payment options (https://octopus.energy/help-and-faqs/articles/what-payment-methods-do-you-offer/).

This is what I do too. It does mean needing to set aside a bit when not using as much energy to make sure the higher energy months can be covered but I'd much rather have that money in my account than theirs!
I did look at moving to a fixed amount per month but the quote was so ridiculously high - 3 months of the fixed amount would have covered what I typically use in an entire year - so I decided to stay as I was!

That sounds really greedy of them!!!! I'm with octopus and I pay £120 a month!!!! Currently just over £200 in credit, which I can have refunded if I want to. They are very good company.

I have always, and still do, pay quarterly and just for what I have used. It's been an option with every energy company I've been with, and I do swap about every few years checking for the best tariffs. Also always by direct debit. OK, I may pay a few pounds more a year but I never have to get cross with energy companies making up random inflated monthly amount, and running up huge credits, which is worth it to me.

Appreciate it doesn't work for a lot of people, who would rather pay a set amount every month, but for OP, if you want this set up, it's perfectly possible with most energy companies.

Just stop the DD
And do it as pay on receipt of bill, if you are in credit, the amount will be £0

Not hard surely????

Just move to octopus. You can change your direct debit whenever you want online no hassle. And can request a refund of your credit online too.
You get £50 credit for swapping to them, plenty of referrals on this board.

If they do it right you should find you're in debit in the winter and credit in the summer evening out overall (probably a bit in their favour no doubt). If you are always in credit you are paying too much on your direct debit.

I've just been having a good look at the online info on my Ovo account and there are no options that I can see to pay by variable dd or on receipt. The only option is to do what I'm doing. So perhaps the time has come to switch provider. I have to send them a reading every month anyway so that won't make a difference.

Thanks twomanyfrogs. Yes, always in credit, even in the depths of winter. And I'm diligent about sending readings, so I know it's accurate. That's why I'm annoyed by it - no benefit to me at all that I can see.

You're not wrong to be frustrated and annoyed by this situation but, strictly speaking, it isn't something you have to do. It's a choice you make to take advantage of the cheapest rates. I pay on receipt of invoice because I don't believe in Direct Debit arrangements. I accept that this means I don't get the DD discount and I'll always miss out on cheap offers.

Sainsburys don't do this I get refunded as soon as i get to £500 in credit just need to ring them.

We have a oil fired boiler, so our electricity bills do not go crazy in winter.
With Eon and we have around 200 in credit by choice as monthly they keep reducing our DD.
On smart meter and the usage is low medium for our household type.
But you can set a variable DD, where you just pay whatever usage you have.

I pay, by variable direct debit, on receipt of my monthly bill which is based on my smart meter readings - Octopus.

OVO don't appear to offer this.

You just have to be really arsy with them, phone them up or message them and amend your direct debit. Don't be fobbed off.

We have an ovo account but smart meter and like to build credit up for winter £130 DD. In winter we go over that amount in usage but summer much less.

To be honest we’ve never had issues on 7 years. They recommend for us to adjust the direct debit as credit builds higher but we don’t. .Then after the worst of winter we take out a chunk of the credit ( online very easy) It currently recommends minimum £50 DD which we can adjust as needed.

Octopus never do this to us. We always keep the DD around the amount we use but when our usage dropped massively, I just clicked a button to get it refunded. I think if you are less than £70 in credit you have to email them to get a refund. But yeah. They just don’t do it.
They do seem to be one of the most ethnical energy suppliers in the market.

OVO proactively contacted us to say they thought our monthly DD was too high based on our usage, and they were reducing it. Are you sure they wouldn't reduce your DD if you rang them to ask?

Appreciate you are annoyed at the principle of DDs.

@strangeandfamiliar you absolutely can pay in different ways other than DD. See https://www.ovoenergy.com/help/article/how-to-pay, although do check if they charge you extra if you don't pay by DD.

This just appeared in my feed:

Octopus, the UK’s largest energy supplier, announced last month that it will continue its £30 million assistance fund into this winter for pensioners who do not qualify for state support. The company also has a range of other measures, including giving out free electric blankets to vulnerable customers.

https://www.lancs.live/news/cost-of-living/major-announcement-octopus-customers-over-29942374?utm_term=Autofeed&utm_medium=Social&utm_source=Facebook&fbclid=IwZXh0bgNhZW0CMTEAAR0Q5RB7ZhOt64T1s66EHewo6K9GyrtYy_iMivueTQ__jcdlw_BCORz-syc_aem_hxXdMOjDA_PBSyoYaujugw#Echobox=1726472415

idk how they get to be the biggest supplier with a CEO who still seems to have a moral compass, but here we are!

I'm with OVO, I just log in to my account and change the DD it suggest a minimum dd based on the previous year, but it's never stopped me from changing to below that. I've always found it quick and easy to amend.

You don’t.

I am with Ovo and I pay on receipt of bill. I refused to switch the system you described as I want my money in my bank not theirs.

I find it worth it pay slightly more in order to not spend hours of my life trying to claw my money back and negotiate lower direct debit amounts.

The simplest way to get your money back is to switch provider.

If you want to stay with your current provider, the easiest way to move to "payment on receipt of bill" is to cancel your direct debit with your bank. You will get a couple of emails/letters telling you to submit a new direct debit instruction (ignore them), then they will automatically move you to payment on receipt of bill. Your first few bills will use up your existing credit, then you can pay by cash/cheque/BACS/credit card/debit card. Don't spend hours of your life trying to change your account type online. Take decisive action from your side and let them sort it out from their side. If you pay the bills, nothing bad will happen.