17th July 2019
How we’re trying to help you avoid surprise debt
Greg Jackson, Founder
- It's really important to make sure your monthly payment amount is enough to cover the cost of your energy to avoid racking up debt.
- We are tackling this issue with regular 'account health' check-ups, starting 45 days after you come on supply. We use the best information we have available to us (your meter readings, information from your old supplier) to check that your monthly payment is the right amount to cover your energy usage, and email you if it isn't.
- These are sometimes tough conversations to have – but we think it's much better for you to know early on if your Direct Debit isn't right, so you're not hit with a big surprise bill later on.
- If you've received one of these emails, and you think we've got it wrong, or you want to talk about another way of paying, just reply to the email and our team will help.
- You can always monitor your payments and energy charges yourself through your online account – and adjust your Direct Debit amount, make one-off payments, and even request credit refunds.
Surprise bills are a massive issue in energy.
Many customers tell us when they join that when they leave their previous suppliers they’re hit with big bills, sometimes hundreds or even thousands of pounds, even though they’ve been paying what they were originally asked to every month.
It turns out they were using more energy each month than what they were paying for, and their energy supplier wasn’t telling them.
It feels like the biggest swindle imaginable. Surprise bills are responsible for a real lack of trust, for good reason. Some suppliers won’t tell you there’s a problem with your payments until you’ve already built up a significant debt. They might even make it hard to spot through confusing bills hidden behind a password wall. Worse, some even insist you stay with them on pricey tariffs with early exit fees until the debt is cleared.
We’re working to tackle this issue head-on with our customers – by giving you the power to control your own energy account, and sending transparent comms and easy-to-understand bills. Plus, we regularly review your account health ourselves. If we think you’re not paying enough and will run up debit, then we'll contact you and let you know...
45 days after you join us, we review your ‘account health’, and then we repeat every three months or so after that.
This just means we’ll take the best information we have available (meter readings you give us, information from your previous supplier etc.) to estimate how much energy you’re likely to use in a year and make sure that we think you are paying the right amount every month to cover that.
My Direct Debit has been coming out every month. How can I be in debt?
To see how this happens, let’s go back to the quote you got when you signed up.
One of the most important bits of information you give us when you get a quote from a new energy supplier is your ‘annual energy consumption’. That’s how much energy you think you’ll use in a year. We like you to give us your actual energy usage figures in kWh (which you can find on a bill from your current energy supplier). If you really can’t get us that, we will take an estimate (think “low”, “medium” or “high” user, based on the size/age/build of your house, and how many people you live with). These estimates are based on national averages, so while they’re generally right across the country, they’re not personalised to your real energy usage, and are more like a best guess.
We take the consumption number you give us (whether actual or estimate) and multiply it by the unit price of our energy to quote you the cost of a year’s worth of energy. Then, so you pay the same amount year round, we divide that by 12 to get your monthly payment. (That’s right – it’s not your monthly payment amount that’s ‘fixed’ when you choose a fixed tariff. For more info on this, head to our FAQ.)
A quote is just a quote however. We don’t know exactly how much energy you'll use each month. Perhaps someone moves in, or out of your house, or you buy a new boiler, and so the amount of gas and electricity uses can change. If you use more or less energy than we quoted for, the amount you may each month needs to change. For example, if you start using more, the account credit you’ve been topping up your account with each month isn’t enough, and the charges start to build up into account debt.
If your payments aren’t enough to cover your energy costs, it’s better to know as early as possible so you can adjust the amount, make a one-off payment, and yes, even compare us to the market to make sure you’re getting the best prices that you could be (though we’re usually hovering around the top of the price comparison tables).
To make sure you're aware of any discrepancies, we’ll conduct regular checkups of your account health to make sure your payment ‘top-ups’ every month are in line with how much you’re being charged for your energy.
The first check-up happens 45 days after we start supplying your power.
Within a few weeks of the day we take over your energy, your old supplier sends us all your historic meter readings. We use these to build a much more accurate picture of how much energy you’ll likely use each year. That means if you got a quote thinking you were a “low energy user”, and then your old suppliers’ meter readings show that your consumption over the past years has been a lot higher, we can spot it nice and early, and let you know. If this happens, we’ll send you what’s called a ‘payment adequacy’ review, adjusting your Direct Debit to a level that will properly cover the cost of the energy we expect you’ll use in a year.
We know your historic meter readings can't be taken as gospel, and that this year’s energy usage won’t necessarily be the same as the year before.
The new payment level is always just a suggestion, based on the best information we have.
If you think we’ve got it wrong, or the information we have isn’t accurate for you, we’d love you to correct us! Or, if you have a bit of debt on the account, but you know the energy usage in your home is about to change dramatically — say, you’re going on a long holiday — we’ll factor that in, and can put your payments back down.
All we need to set the record straight are meter readings. If you send us readings, we can send you an up-to-date bill for the energy you’ve really used, and use the new readings to help build an even more accurate profile of your energy usage.
We change your monthly payment to the suggested amount at the time the email is sent, because not everyone reads our emails, and it’s way too easy for something like this to slip under the radar for months until there’s hundreds’ worth of debt to pay off. Better to make the change and let you know, so you can review it and decide if it looks right or not.
The bottom line is, we're not enforcing any change, and if you think there's an issue, we want to hear from you so we can fix it. You have complete control of your payments through your online account. You can adjust your Direct Debit amount up or down whenever you want. If you have a lot of credit on your account, you can even request a refund. If you’re really not happy with the amount we’ve set, you can compare us to the market and switch away. All you need to do is compare our tariff prices (that’s our unit rates and standing charge) to the other best deals out there. You can leave Octopus any time, no matter what tariff you’re on, with no exit fees.
We’ll keep reviewing your payments every three months or so, and making suggestions based on the best information we have about your energy usage (That's why giving regular meter readings is so important. The more often you give us your real energy usage numbers, the more accurately we can predict how much energy you'll use in a year.) We're always happy to work with you on a different payment level, and you can control your monthly payments yourself online, too. If you have any concerns at all, please get in touch.
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