Electricity Fixed Payments

SueA

On bonkers and looking at the details of the options that cost me less in KW and standing charges. All the Electric companies have these fixed rates charges where you pay the same each month. And the small print says unless you get large bill etc etc. Any over payment is put onto your next years accounts.

Does anyone else think this is a con, after all this means the electricity provider gets to keep your hard earned cash in their bank account and get bank interest on it, along with the monies you give them for supply.

I'm I missing some point here or is it just another way to take more money of Joe Soap?

ytpe2r5bxkn0c1

It's an attempt to spread your costs evenly over the year. It is based on an educated guess of usage. Naturally any overpayment will become apparent after a full yearly cycle. It's there to help you spread the load over the year rather than having small summer and large winter bills. If you don't like the concept just as you go. It's no con whatsoever. Do what suits you.

Fred Swanson

This post has been deleted.

SueA

Neil Spoiled Soybean wrote: »

It's an attempt to spread your costs evenly over the year. It is based on an educated guess of usage. Naturally any overpayment will become apparent after a full yearly cycle. It's there to help you spread the load over the year rather than having small summer and large winter bills. If you don't like the concept just as you go. It's no con whatsoever. Do what suits you.

The point is not that I want to underpay but if I overpay then the supplier has had funds in their account receiving interest on the same. If a lot of people were paying this way then during the summer when less electricity is used these funds and interest would mount up in the suppliers account. Thus giving them large interest payments on funds paid, if you like, in advance for winter electricity consumption. The supply company would make a substantial profit from these funds if enough people paid using these schemes.

While the actual funds would be rolled over to the following year, and there is no mention of what happens if you change supplier, there is also no comment on if interest accrued on the customers funds what happens to these.

meme74

I think you may be overthinking it all to be honest. The "levelled out" payment that you pay each month is recaluclated every year so if you ahve overpaid the overpayment carries over to the following year and your payments will be more in line with your usage. You also still receive your bi-monthly bill showing how much you owe so theres no hiding anything. Its a way of spreading the cost for the consumer which, for many people is an excellent way of managing their budget as they know how much they are spending each month and dont get hit with a huge bill in the winter months.

If you dont like the idea of it just stick to regular payment method as and when you receive your bill. It wouldnt bother me if the company was making interest. Its a service to the customer.

ytpe2r5bxkn0c1

SueA wrote: »

The point is not that I want to underpay but if I overpay then the supplier has had funds in their account receiving interest on the same. If a lot of people were paying this way then during the summer when less electricity is used these funds and interest would mount up in the suppliers account. Thus giving them large interest payments on funds paid, if you like, in advance for winter electricity consumption. The supply company would make a substantial profit from these funds if enough people paid using these schemes.

While the actual funds would be rolled over to the following year, and there is no mention of what happens if you change supplier, there is also no comment on if interest accrued on the customers funds what happens to these.

So much there. Firstly can you come up with a better way to spread payments evenly over a year? Of course credit build up in the summer months, that's the whole idea. You don't have to go for this type of payment arrangement, indeed only a small percentage do.
If you leave the supplier any credit built up is refunded.
As for interest; really? Have you seen interest rates? The credit built up ks actually a liability on the company accounts any way. As many accounts are likely to have money underpaid as overpaid.

Saudade

Hi Sue,

I arranged a fixed monthly payment agreement last year with my supplier. When I called them to set up the details, they actually let me choose the amount of my monthly direct debit payment, I wasn't expecting that amount of trust from a supplier. I decided to go with 40 euro a month, I may have even gotten away with 30 or 35 a month, as for the year before that, my bill every 2 months with electric ireland usually came to around 80.

Of course, when I moved into my new place, I didn't factor into the fact that my partner was also moving in, and also that for a few weeks around Xmas and New Year, I would be working mostly from home. Electricity usage 16 hours+ per day. Our first bill in January came to around 140. So even though we reduced our electricity usage every month as spring was approaching, we have always used more than 40 euro's worth of electricity per month, so we have actually always 'owed' money to them. (Though we did get our last bill down to 80 :-)

After around 6 or 7 months, they changed my monthly payments from 40 to 70 a month, to gradually make up the difference. This is more than fair enough. My only problem was that they didn't tell me, no phone call, no letter. As we enter the end of the agreement, I think we still owe them, but not by much.

The point of this post is to make sure that if you choose fixed payments, try to work out how much per month you have paid for electricity for the past 12 months, and maybe minus 10 or 15 euro's off of your monthly average, to help to protect yourself from over-paying from the start. It's surely better for you to owe them money, rather than the other way around. You'll be making interest on 'their' money :-)

SueA

I don't think I'd like to owe anyone money, I like to have everything up to date. Yeh, I've kept records of my usage for over 5 years so I know how much is used and what would be paid. Though I like the idea of having lower bills in summer and having the extra cash in my pocket. Think I'm going to stick with paying for usage rather than set monthly payments.

The terms and conditions all say that direct debits can be increased without notification which to me defeats the point of having set bills.