Utility companies adjust direct debits in winter and summer, but this sometimes amounts to an interest-free loan from us little guys. You don't have to take this!
It's not unreasonable for utility companies to charge more in winter and less in summer, or even to try to average it out. Neither practice is unusual. However, I've received a few emails about unfair seasonal increases to people's gas and electricity direct debits, which means there are probably a lot more people out there who have the same problem every winter.
One lady was told that, despite being in credit, her direct debit would go up from £35 to £98 per month over winter. That's a 180% increase. You have to wonder how fair it is that the utility providers take it upon themselves to predict your usage. A Foolish discussion-board user says of his seasonal hike that it: "Was not justified BECAUSE I AM ON A FIXED RATE DEAL". Now you have to wonder whether these are deliberate tactics or merely incompetence.
OK, I'll come clean. The lady I mentioned is my lawyer-mother. In case you're having similar problems, here's how she sorted it out.
She wrote to them saying that she was in credit and that she did not give them authorisation to increase the direct debits. They called her up ('bully tactics' she called it) to say that if she did not agree then they would move her onto a different tariff. They asked her to send them a meter reading. She told them to put it all in writing, which they did.
She sent the meter reading by email, stating: 'I am not in arrears and you do not have my authority to increase my direct-debit payments. You are not in a better position than me to estimate how much gas and electricity I am going to be using over the next 6 months.
'I would be grateful if you would now confirm that my direct debits and tariffs remain the same.' She asked for her email to be referred to the complaints department.
From the Customer Care department she received an email apology, a retraction and an agreement that she would continue to pay £35 a month. Interestingly, the Customer Care rep's excuse was that the direct debit option was to 'spread the cost of energy over the year by averaging out the cost of this'. If £98 per month is now the average bill, they're saying they expect her usage to cost £1,176 next year, significantly more than the £375 it cost this year!
It didn't end there though. The next day she received a letter saying that her direct debit would go up to £43. She emailed them back immediately: 'You are an energy provider, not a bank that makes a profit by borrowing interest-free from each of its clients.Keep to your agreement'.
Maybe it was all just silly errors. And it does all balance out in the end, when adjustments are made, but huge hikes make it harder to budget, and this money should be in your bank accruing interest. The moral is, if you're in credit - resist the seasonal increase!
So it's all very simple. But make sure you do it in writing, as the discussion-board user I mentioned sorted it out over the phone, but was still billed an extra 20%.
> Compare gas and electricity prices through The Fool.