back to menuWe have criticised some electricity supply companies in the past for taking advantage of customers paying by direct debit. We have said that a 2% discount on your bill is less than the company saves by getting you to pay monthly by direct debit, while still leaving you with the problem of noticing and dealing with errors. We have also objected to the way some companies try to get you to pay as much as three months in advance, reducing their debt and costing you interest on your savings.
To cap it all, if your regular payments lead to a substantial credit balance with the company, you probably have to ask them - specifically to repay you. In one very bad case, handled by the Oxford Consumer Group, a credit of over £600 was allowed to build up, and the company proposed to pay the customer back over a period of years by reducing his monthly payment to £1.
Southern Electric has now got our message. In discussion, it has accepted that the administrative saving from direct debit payments is worth about 1% of an average bill, and your monthly payments (which pay one-third of your quarterly bill in advance) are worth another 1% to the company. It has also increased its percentage discount for electricity bills, paid monthly by direct debit, from 2.4% to 2.6%, though this compares badly with their 6% discount for monthly paid gas bills. The company is also reviving its practice of offering the discount to customers who pay by Standing Order, and offering a twice-yearly review of the balance on your account, reducing the chances that you will run up either a large debt or a large credit balance.
Are there still snags? Yes, I’m afraid so. There will still be no automatic repayment of a credit balance, however large, but if you notice how much you are owed you can ask for a cheque or a recalculation of your monthly payments. If, however, you owe them money they will, automatically, recalculate your monthly payments. We would still prefer an automatic refund if your credit balance exceeds, say, two monthly payments.
The company’s bills also contain this comment: "Generally, in the summer, your statement will show a credit balance because you are spreading the cost of your electricity bills over the whole year". We see no reason why a utility company should owe you money at any time, because its non-discounted charges are based on giving you up to a quarter’s credit. We think you should try to arrange to be in balance with the company at the beginning of your period of highest use, not at the end.
One more thing about direct debits. You should make it clear, whenever you sign a direct debit form for monthly payments, that it is not a Variable Direct Debit; your authority to your bank is intended to cover a fixed amount each month. If the utility company is not prepared to obtain your agreement in advance before it changes the amount it tells your bank to pay them, perhaps you should consider a company that does. In the case of Southern Electric you could pay by standing order which stays completely under your control and still attracts the same discount.
Ken Frere
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