My Direct Debit payments for Gas and Elec etc bill are a constant amount per month. (At least they are until I am notified that the amount is to change. so behaves like a Standing Order would do I suppose). The outstanding balance each month +/- is simply forward to next month and +/- to the next bill. ie the actual taken is fixed.
But the 'phone DD OTOH changes every month depending on the number of calls made. This is how I expected all DD's to behave.
Are these simply just two ways of implementing DD's? (they are not fundamentally different payment methods?)
All DDs are worded to say they can take however much they like, but the regs probably say they have to inform you of changes, and your phone bill does that.
But so -in principle- could his Gas and Elec bill, so there is no reason why the Gas/Elec DDs should not also be based on actual consumption. Instead, they are actually providing a budgeting facility which levels out the payments so that in winter/summer you pay less/more than you actually use. Customers are probably paying a premium for this "service".
"All DDs are worded to say they can take however much they like, but the regs probably say they have to inform you of changes, and your phone bill does that."
Usually, yes, the terms you agree say they can take whatever they like whenever theyt like. There is typically a nice "DD guarantee" that says that if they violate the terms then the bank will make a refund - but how they can violate the terms when the terms allow them to take whatever they want whenever they want?
But most people are not metered in real time and so the so called "budget" system is there to handle monthly billing verses half yearly meter reading (in our case).
The terms *do not* allow them to "take whatever they want whenever they want", but only what they are due and when it's due. The rules also require them to let you know in advance how much they will take and when.
Whether the meter readings are actual or estimated is not important. I apologise for not being clearer above. Instead of "actual consumption" I should have said "actual or estimated consumption".
The main reasons for the budget system are (1) that the customer knows long-term in advance exactly how much to budget each month, and (2) to even out the high winter spending with the low summer spending.
There is no reason why you should not have quarterly billing, with actual readings taken only once in a blue moon, together with a variable-amount quarterly DD. In fact, I have just this for my electricity.
Over- or under-estimates are self-correcting at the next reading, except where a large difference builds up before the next tariff change. It is then in the customer's best interest to advise their own reading if a huge under-estimate has built up, to avoid being charged at the new higher price for past use. Of course, if an over-estimate has built up, it's best for the customer to keep quiet. :-)
It is also so that the utility has a steady cash flow, rather than one which is seasonal. If you are billed quarterly they have the benefit of three month's payments before you start, hence they can afford to offer a discount.
In my own experience, in which I do not use either rockets or electricity as the prime source of energy for heating but for which some of the latter science is used for moving the heat around building, the difference in electricity usage is spectacularly small, from quarter to quarter.
In my own case I pay monthly on a budget scheme but by some helpful occurrences my energy supplier always seems to be banking with me, rather than me with them, so I am quite happy with my arrangement.
I've no idea, to be honest. Can't say I've noticed it being wildly out, and am happy to live with it since eventually there will be a real reading or a card left requesting a customer reading.
If they under-estimate, I get a free loan, and if they over-estimate, I'd be paying in advance for some of my future usage, with a chance of doing so at the old rate when there is a price increase, so it's a win-win situation.
Do you need to wait for a card to give a customer reading? All my bills say "phone NNNN NNNNNN to give a customer reading..."
[I thought customer reading cards were a thing of the past?!]
"Ronald Raygun" wrote
... unless the price increases before you get to pay!
"Ronald Raygun" wrote
But that's only better if the interest you would have gained on your money in the meantime, would be less than the increase in price...
"Ronald Raygun" wrote
That's an interesting way of thinking about it :- Effectively, you are saying something like "if they estimate anything *more* than 121.37 then I'm better off, if they estimate anything *less* than 121.37 then I'm better off, but if they estimate exactly 121.37 then I'm even."
[Taking the "correct" amount to be 121.37 -- replace with whatever the "correct" amount actually is for you.]
Is there really only one exact amount at which you are not better off?? ;-)
Yes, you either wait for a card, saying "the meter reader called today but couldn't be bothered to ring your doorbell so please read it yourself", or you wait for an estimated bill and then provide a more accurate reading if you feel the urge. But you don't just ring them up spontaneously, you always wait for a triggering event.
I guess it varies from supplier to supplier. It can be more cost effective to leave a card than to issue a wrong bill and then have to issue a corrected one.
Sure, but with luck the two effects balance out.
In the present climate we can take that as a given, wouldn't you say?
I thought that would bring you out of the woodwork.
An interesting question.
One thing they tend not to do, by the way, is issue bills as a matter of course on the dates of price changes. Instead, they just send you the bill on your normal date (quarterly or whatever) and regardless of whether the latest reading is estimated or actual, they will estimate a reading on the price change date wherever in the billing period that lies. I don't know how much scope there is for arguing with that estimate if the period end reading is known and the period start reading was estimated and significantly wrong and you didn't trouble yourself to correct it.
Normal people don't just ring them up spontaneously, but you can do that. Before moving house last year I rang up with slightly inflated readings and was billed for up to a fortnight before
Round here I have been given a card with a return date for the meter reader
Hmm. In Feb I got a gas bill which over estmated by nearly 50%. On Saturday I got notice of a price increase, effective the day before. Presumably this was to stop me ringing in with even greater inflated readings. But in effect I bought a huge amount of gas at the old price.
My very weary Bank Manager said most of his problems involved sorting out problems with variable direct debits.
I took this to imply that such things as fixed direct debits existed.
AIUI direct debits can be set up to have fixed dates, and/or fixed amounts.
Variable direct debits (in respect of amount and date) have just become the default because that's all merchants offer.
IME In most cases they are unchallengeable under the DD guarantee, "Because you signed for a variable date and a variable amount". So what are you complaining to us about?? :-(( DG
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.