Electricity Suppliers - advice?

[Harry Bloomfield]

[QUOTE JohnW2]Well, I obviously don't know how they do their forecasting in relation the the electricity they buy - but, in terms of what they are selling ....

... the small suppliers, with very tight cash flow, are the ones who would really like to benefit from as accurate forecasting as possible, but they are, ironically, the ones with little, if any, historical data .. and the signs seem to indicate that the big boys 'don't bother' to do any real modelling as far as setting customer payments (e.g. DD amounts) is concerned ....

The smaller companies maybe piggyback onto the bigger suppliers, charge the same less a few percent and hope for the best.

... my current 'big 6' supplier (E.ON) estimates usage over the coming 12 months as exactly the same as it has been during the preceding 12 months. They turn that usage into money and divide by 12 to get the ('fixed') monthly payments for the coming 12 months. They review the DD amount only once, at the 6-month point, on the basis of actual or estimated meter readings at that point.

My spreadsheet does a projected calculation for the annual cost, I just feed in the costs per unit, standing charge and it does the rest. It tallies very closely with what the energy companies suggest my cost will be - they only differed this year by around £2 or £3.

E.ON do offer some sort of individual 'forecasting' on their website ("your energy overview"), but it is totally bizarre and clearly inaccurate/useless. It presents a bar chart of forecast per-month usage and costs for the period up to one's next bill - and mine is currently showing June as having by far the highest 'forecast usage' for the whole year! Goodness knows how they arrive at that, or what use it is meant to be!

However, returning to your point, I imagine that quite detailed historical data is available from the generators (and probably available to all suppliers) as regards patterns of demand in various areas, at different times of year and (either directly or indirectly) under different weather conditions - although the latter would, of course, only be of any use if one also had reasonably good long-term weather forecasts!

Kind Regards, John[endQUOTE]

I have yet to find that...

 

[JohnW2]

To be clear - the situation described above is where you already have a credit balance with a supplier, and they want to increase the DD. You don't owe them any money, and no alternative payment is required.

I don't think that anyone is disagreeing with the common sense of what you are saying.

However, common sense and the law are not necessarily the same thing. If one enters into a contract, a condition of which is that one makes regular payments (by any method) throughout the period until that contract ends, then if one stops making those payments before the contract ends, then one is legally in breach of that contract - and it seems that that's what can cause the legal 'messiness', even if the situation is that they owe one money, rather than the converse.

That's my understanding, anyway - and, as I said, it seems that suppliers sometimes talk to each other to the extent that they will decline to supply someone who has a history of such 'behaviour' with previous suppliers.

Kind Regards, John

 

[JohnW2]

[QUOTE JohnW2]The smaller companies maybe piggyback onto the bigger suppliers, charge the same less a few percent and hope for the best.

We're not talking about what they charge (per kWh) for electricity. That is often more than just a few percent less. and is presumably determined by their knowledge of what it costs them to buy electricity, the size of their overheads and hence how low they can set the price yet still achieve an acceptable level of anticipated profit. One factor which allows the small companies to be cheaper is the fact that, unlike the big boys (with the truly 'fixed' monthly payments) they vary the monthly payments throughout the year (an to maintain those credit d for other less clear reasons!) in an attempt to keep accounts in credit. With the big boys, acckiubnts are often in debit during the Winter months.

However, as I said, it's not the price/kWh we were talking about but, rather, how they attempt to forecast future usage (hence vary monthly payments) in attempts to achieve that 'always-in-credit' situation.

My spreadsheet does a projected calculation for the annual cost, I just feed in the costs per unit, standing charge and it does the rest. It tallies very closely with what the energy companies suggest my cost will be - they only differed this year by around £2 or £3.

Same here - but, as said, it would appear that some of the smaller companies manage (deliberately or otherwise) to set DDs far higher than is necessary - goodness knows how it arises, but there are plenty of people out their moaning about the difficulties they have experienced in getting back credit balances of hundreds of pounds when they switch away from a small supplier!

I have yet to find that...

I'm not sure what that relates to!

Kind Regards, John

 

[SimonH2]

Well, I obviously don't know how they do their forecasting in relation the the electricity they buy - but, in terms of what they are selling

Well the forecasting for purchases will follow on from forecasting for sales - and I suspect it's very important to their profitability to make forward contracts to fix the prices they are going to pay.

the small suppliers, with very tight cash flow, are the ones who would really like to benefit from as accurate forecasting as possible, but they are, ironically, the ones with little, if any, historical data

Indeed

I imagine that quite detailed historical data is available from the generators (and probably available to all suppliers) as regards patterns of demand in various areas, at different times of year and (either directly or indirectly) under different weather conditions ...

The generators won't have that - they won't have the view of the whole network that would be required. All any generator will know is what they've been dispatched to generate and what they've actually put out at the power station gate.
The grid operators would have a good overview of overall demand - but I very much doubt that it would be useful to a lecky seller. Even if the grid kept records of how much was supplied to different areas (which I doubt *), it still doesn't break it down to residential, commercial, industrial users - and I can't help thinking that a typical residential demand profile would be matched very well with an aggregate total that included commercial and industrial users.
However, the actual sellers will have meter reading data from many customers which they can break down in a fairly fine grained manner (eg by type of customer, if they've electric heating, etc) if they wish. OK it's going to be "a bit coarse" if meter readings are only every few months, but aggregating many many thousands of such customers (with different meter reading cycles) would massively improve the usefulness of the data.

Of course, a new startup won't have that information from their own customers. And the big suppliers probably have the economy of scale (and financial stability) that they don't need to bother about the detail down to that level - what they lose on one group, they'll make up on another, and it can all be adjusted when they review the DD value.

* Bear in mind that small generators will input into the grid at a local level - into the 132kV grid for things like the gas turbine station we used to have near here and Calder Hall up the coast, and down to 240V or 415V for small embedded generators. For example, at my last job we had a customer with an 87kW water turbine - and that would be invisible to the network operators (even down to the DNO) as it just shows as a reduction in demand for the (415V 3 phase) circuit to which the customer is connected.

 

[JohnW2]

The generators won't have that ... The grid operators would have a good overview of overall demand - but I very much doubt that it would be useful to a lecky seller.

Yes, I didn't type quite the thing. I meant distributors/network operators - but, as you go on to say, even that will not be broken down in a manner of much use to those selling electricity to domestic consumers.

Of course, a new startup won't have that information from their own customers. And the big suppliers probably have the economy of scale (and financial stability) that they don't need to bother about the detail down to that level - what they lose on one group, they'll make up on another, and it can all be adjusted when they review the DD value.

Don't forget that we are (at least were) talking about small companies playing around with DD amounts during the period of a fixed-price contract, so their only possible 'excuse' could be revised estimates of a particular customer's usage. In my case, they would be pretty hard-pressed to convince me on that basis, since I can produce plenty of detailed data showing fairly consistent usage from year to year.

Kind Regards, John

 

[foxhole]

The companies all have access to previous customer data for their forecast .(estimates).
Not that it makes them anymore accurate. DD GUARANTEE allows you to challenge and refuse any change you don’t agree .

 

[JohnW2]

The companies all have access to previous customer data for their forecast .(estimates).

True, but I would think that the only really legitimate reason for changing the estimates mid-stream would be if meter readings indicated that the up-front (contract start) assumptions about usage (on which DD amounts had been based) had been incorrect. In most of the cases I've seen people moaning about, that seems far from the case, with meter readings suggesting that DDs were too high (having resulted in significant credit balances accumulating), despite the supplier attempting to put the DD up even higher!

DD GUARANTEE allows you to challenge and refuse any change you don’t agree .

I think that you must be looking at a different DD Guarantee than I am! All I see is a guarantee that the organisation concerned will notify one in advance before collecting a DD if the amount, date or frequency of payments is changed - no mention of one being able to refuse to accept the change (other than by cancelling the Mandate - the possible legal consequences of which we have discussed at length).

One obviously is free to 'challenge' or otherwise argue with the company about a proposed increase in amount collected by DD, but how they react to that is up to them. I see nothing about the DD system which prevents a company collecting as much from your account as they want, whenever they want, so long as the Mandate is in force - so, in a dispute situation, I imagine that one has to try to persuade the company to collect less than they intend/propose.

Kind Regards, John

 

[foxhole]

DD aren’t based on readings , only historical data, current usage is not taken into account .

Most complaints are based on customers inability to understand the system and even how a meter works .
When I worked for London Electricity we had constant complaints from customers and worries about estimated bills , they could not understand that having a meter read would correct their account no matter how many estimates they had previously .

 

[bri160356]

Thanks. From what I've seen of the reviews, it seems that the people I really need to hear from are those who have gone with a small/cheap company and then subsequently 'switched away' from them - since that seems to be when the great majority of the problems/dissatisfactions arise.

Kind Regards, John

Some of the ‘problems’ that are experienced when switching energy supplier (regardless of size) can stem from a lack of understanding of how the switching process actually works, (or doesn’t, in some cases ).

The switching process is (usually!) very easy and simple provided you don’t queer your own pitch during the exit phase;...unilaterally cancelling your Direct Debit (even if you are well in credit and disputing a bill) is a definite no-no.

Once you’ve selected and signed-up with your new supplier they will do all the donkey-work for you;...they will give you a switch-over date, at which time you furnish your new supplier with your final meter reading/s,... and that is it....(in theory anyway!)

However, it’s usually after this point that the complaints begin;...e.g. estimated 1st bill from new supplier even though you’ve given them definitive meter readings,...no final bill from previous supplier,...no credit refund from previous supplier even after many weeks ,...the supplier has ignored my meter readings and they’ve used their own ‘accurate’ figures,...et al.

Here’s an explanation of why some of the aforementioned complaints can, and do, arise:- your final meter readings are sent (by your new supplier) to separate 3rd party Gas and Leccy ‘meter reading verification companies’. These verification companies, licensed by OFGEM, are entirely independent of the energy supply companies.

It’s the ‘verification companies’ task to validate/check the customers meter readings to ensure the readings are viable. Customers can, and sometimes do, supply inaccurate readings,...often it’s a genuine mistake,...sometimes it’s deliberately deceptive in order to seek financial gain.

The ‘verification companies’ look at historical data/readings and will, if necessary, adjust your final gas or leccy meter reading if they deem it necessary.

Unfortunately the final meter reading verification process can take MANY weeks,... during which time the energy companies just have to sit tight and wait for the process to take its course,...the Energy companies (and ultimately the customers) are pretty powerless to speed-up things and are entirely at the mercy of this verification process time-line,...which can be a LONG one!

It’s only when the final meter readings are ‘verified’ and fed back to the previous, and new, energy supplier that you can be issued with an accurate final-bill and thence an accurate credit refund. The energy companies (and you, the customer) are in a kind of administration limbo until the meter reading verification process is completed.

I’ve changed energy supplier on numerous occasions and to be fair the ‘previous supplier’ has always issued a final-bill and credit refund in reasonably short order,...but only after they’ve received the ‘verified’ meter readings.

Last year I changed supplier from Avro Energy to Yorkshire energy. The Leccy meter reading verification was completed in about 4 days;....however, the gas verification process took over 7 weeks,...no idea why it took so long.

 

[JohnW2]

DD aren’t based on readings , only historical data, current usage is not taken into account .

The initial DD amount obviously has to be a guesstimate set on the basis of historical information (from consumer and/or previous supplier) but it seems that many of the companies we're talking about keep changing (or trying to change) the amount during the term of the contract - allegedly on the basis of meter readings (even if the changes they propose sometimes seem inconsistent with the readings).

Let's face it, contrary to what you suggest above, with a fixed-price deal (which is largely what we're talking about), the only conceivable justification for changing the DD would be related to alleged "current usage", since the price of the electricity does not change.

Kind Regards, John

 

[Harry Bloomfield]

The initial DD amount obviously has to be a guesstimate set on the basis of historical information (from consumer and/or previous supplier) but it seems that many of the companies we're talking about keep changing (or trying to change) the amount during the term of the contract - allegedly on the basis of meter readings (even if the changes they propose sometimes seem inconsistent with the readings).

Let's face it, contrary to what you suggest above, with a fixed-price deal (which is largely what we're talking about), the only conceivable justification for changing the DD would be related to alleged "current usage", since the price of the electricity does not change.

Kind Regards, John

I mucked up the gas consumption I have used for my past three suppliers (I know), I gave them M3 rather than Kw consumed, which meant my DD was too small initially, so I was asked to increase it. My spreadsheet always showed the annual cost as quite a bit greater than the suppliers quoted. It took me a while to realise where the error had ocurred.

My spreadsheet requires costs per unit, standing charges and gas correction factor. Then calculates the likely cost over the coming year, which becomes more accurate as the year progresses and estimates become actual values. It always closely matches what suppliers charge me per month, divided by 12.

 

[JohnW2]

Some of the ‘problems’ that are experienced when switching energy supplier (regardless of size) can stem from a lack of understanding of how the switching process actually works, (or doesn’t, in some cases ).

Many thanks for the detailed explanation, which is very interesting.

.... However, it’s usually after this point that the complaints begin;...e.g. estimated 1st bill from new supplier even though you’ve given them definitive meter readings,...no final bill from previous supplier,...no credit refund from previous supplier even after many weeks ,...the supplier has ignored my meter readings and they’ve used their own ‘accurate’ figures,...et al.

Indeed - those are the very sort of complaints I'm reading.

.... It’s the ‘verification companies’ task to validate/check the customers meter readings to ensure the readings are viable. Customers can, and sometimes do, supply inaccurate readings,...often it’s a genuine mistake,...sometimes it’s deliberately deceptive in order to seek financial gain. .... The ‘verification companies’ look at historical data/readings and will, if necessary, adjust your final gas or leccy meter reading if they deem it necessary. .... Unfortunately the final meter reading verification process can take MANY weeks,...

I see. The obvious, and much simpler (and potentially much quicker) method would simply be to send someone to read the meter - do I take it that that is regarded as 'too expensive'?

In my case, I have provided my present supplier with frequent readings for many years which, if passed to the 'verification company', in theory ought to make the 'verification' very straightforward - is that the case?

[in passing, what if someone has a functioning 'smart' meter - in which case the current supplier should be able to have, and provide, an accurate meter reading at the very moment of supplier change-over?]

I’ve changed energy supplier on numerous occasions and to be fair the ‘previous supplier’ has always issued a final-bill and credit refund in reasonably short order,...but only after they’ve received the ‘verified’ meter readings. ... Last year I changed supplier from Avro Energy to Yorkshire energy. The Leccy meter reading verification was completed in about 4 days;....

That's quite reassuring.

In trying to translate all this into decision-making for myself, one of my concerns/uncertainties is that, looking at the 'on-line complaints', there seem to be very marked (in some cases quite dramatic) differences between companies as regards complaints about these end-of-contract difficulties - yet what you say above suggests that most of of the potential delays lies in the hands of a third party (the 'verification companies') - which surely shoudl be the same for all suppliers.

... You will probably understand my dilemma, in that the deal which seems to be the 'most attractive' for me (a 3-year fixed-price deal from 'Together Energy') comes from the company for whom I've seen far more of these complaints, and generally 'worse reviews' (and an overall ~75% assessment of 'bad'), than I have seen for any other company! It is your opinion that I should not worry too much about the reviews/complaints?

Kind Regards, John

 

[JohnW2]

My spreadsheet requires costs per unit, standing charges and gas correction factor. Then calculates the likely cost over the coming year, which becomes more accurate as the year progresses and estimates become actual values. It always closely matches what suppliers charge me per month, divided by 12.

Yes, essentially the same as mine (for electricity), albeit is is technically not a spreadsheet. My estimates 'for the coming year' make an attempt to model on the basis of (pretty small in my case) seasonal variations during the year.

One potential confusion which arises with forecasts in the final year of a deal (i.e. when the deal finishes during the year) is that the supplier's estimates will be based on the assumption that, when the deal ends, one will revert to their 'standard variable tariff' for the remainder of the year - so their estimates may differ from (be higher than!) one's own forecasts based on a more credible assumption. In that situation (like my present one), I also estimate usage up to the date when the current deal ends.

Kind Regards, John

 

[bri160356]

Hi John, ref your post #117,...(sorry I can't quote it because it will max out the forums word count limit!)

I guess sending a meter reader would be one solution, but the practicalities of actually getting the final meter readings on a specific date could be problematic,...cost & access etc,...and besides, the ‘meter reading verification process’ is written into OFGEM legislation;...the companies involved (i.e. the losing and gaining energy suppliers) are duty bound to adhere to this process. They have no option. The fact that you may have a smart meter and may have supplied accurate and timely meter readings in the past counts for nothing unfortunately. The verification process (such as it is) must take its course.

The following is a paragraph from a TrustPilot review of Together Energy and illustrates exactly (as per my post #114) how some complaints are completely unjustified and stem from a lack of understanding of just how the switching process works; quote:”... when I rang (Together Energy) was told I couldn't get overpayment refunded until final bill issued and could take 8 weeks to refund....... DO NOT TOUCH THUS COMPANY. DISGUSTING CUSTOMER SERVICE !!!!!!!!”;

.....as I said, totally unjustified. However, as with most companies (including the 'Big' ones) I'm sure Together Energy have some shortcomings of one form or another.

I personally wouldn’t be overly concerned about switching over to Together Energy,...if the price is right of course!

Switching is simple and usually painless provided you understand the difference between the myriad tariffs on offer,... and that not all price comparison sites display their tariffs in the same manner.

Some price comparison sites will only show their ‘favoured’ sites which may not necessarily be the cheapest for you. Other sites will include ‘cashback’ offers in the overall price comparison. It is vital that you look at the ‘whole of market’ when assessing the various tariffs.

The Citizens advice comparison tool is a good starting point;...they always show the ‘whole of market’ by default;...they also display the costs in comparison to what you are actually paying now,... as opposed to a comparison against the costs you’ll pay when your present deal finishes and you are moved to your present companies ‘Standard Variable Tariff (SVT). Some comparison sites like to show you various tariffs but only compare them with SVT because it generally shows that an ‘eye catching’ saving can be made,....even though any sensible person wouldn’t let their tariff drift onto an SVT before doing something about it.

Citizens Advice comparison site (unlike most of the other comparison sites) don’t have ‘favoured’ energy companies and they do not earn commission from customer switching,...they also do not offer cashback deals.

Some energy companies offer ‘cheaper’ tariffs that are dependent on you agreeing to have a smart meter installed,...however they are not always up-front about that sneaky clause on their website.

It’s worth investing a little time trawling round the price comparison websites to see how they actually operate and it is vital that you understand the why’s an wherefores of any tariff/energy company you choose.

The comparison sites can be something of a minefield for the unwary and one must never lose sight of the fact that they, with the exception of CAB, are commercial enterprises!,... learn about fixed tariffs/variable tariffs/exit fees/ length of tariff/tariff clauses e.g. mandatory smart meter et al.

However, once you’ve gained the ‘knowledge’ so to speak, you can switch with confidence and hopefully secure yourself a good-deal,....now, and at any point in the future.

Citizens Advice Bureau comparison tool.


Moneysaving Expert ‘Cheap energy club’.

 

[JohnW2]

Hi John, ref your post #117,...(sorry I can't quote it because it will max out the forums word count limit!)

Interesting - that's a new one on me. Although it makes some sense, in all the years I've been here I have not come across a "word count limit" - despite the fact that I am far from known for my brevity

I guess sending a meter reader would be one solution, but the practicalities of actually getting the final meter readings on a specific date could be problematic,...cost & access etc,...and besides, the ‘meter reading verification process’ is written into OFGEM legislation;...the companies involved (i.e. the losing and gaining energy suppliers) are duty bound to adhere to this process. They have no option. The fact that you may have a smart meter and may have supplied accurate and timely meter readings in the past counts for nothing unfortunately. The verification process (such as it is) must take its course.

Fair enough - as you say, if that's the mandatory system, that's the mandatory system, but it sounds as if it has not necessarily been thought out in a way that it is in the interests of customers (particularly in relation to speed). In any event, since I will not have any significant credit balance if/when I leave my present supplier, and given that I'm looking primarily at fixed-price deals of at least 2 years duration, any such difficulties would be at least a couple of years into the future for me!

The following is a paragraph from a TrustPilot review of Together Energy and illustrates exactly (as per my post #114) how some complaints are completely unjustified and stem from a lack of understanding of just how the switching process works; quote:”... when I rang (Together Energy) was told I couldn't get overpayment refunded until final bill issued and could take 8 weeks to refund....... DO NOT TOUCH THUS COMPANY. DISGUSTING CUSTOMER SERVICE !!!!!!!!”; .... as I said, totally unjustified. However, as with most companies (including the 'Big' ones) I'm sure Together Energy have some shortcomings of one form or another.

Indeed, I understand that, up to a point. However, as I have said, what has concerned me a little is that such (probably mainly unjustified) complaints seem far far more common with Together Energy than with any other supplier I have looked at, which is odd if the 'problems' relate to issues over which the supplier has little control. This has led me to wonder whether Together Energy are perhaps themselves somehow delaying things (particularly repayments) far beyond the delays resulting from Ofgem-mandated procedures, but are hiding behind the excuse of those third-party issues?

I personally wouldn’t be overly concerned about switching over to Together Energy,...if the price is right of course!

That's quite reassuring, particularly given that you have clearly seen what's being said about them on TrustPilot!

Although not quite the immediately cheapest, the attraction of the Together Energy is that it is offering a 3-year fixed-price deal. To give you an idea of where I am at the moment, on the basis of my usage over the past year (about 9,000 kWh/year, E7 with ~48% night usage), the comparisons (MY calculations) I'm looking at are (yearly totals):

My Current E.ON tariff (ends next month) ... £1,202
Best (only!) 2-year fixed price offered by E.ON ... £1,540
Together Energy 3-year fixed price ... £1,309
ESB 2-year fixed price (one of the best 2-year deals on offer) ... £1,285

... given that, with any of the 2-year deals, the 'third year' would undoubtedly cost be substantially more, it is apparent that, over 3 years, the Together Energy deal seems to win 'hands down'.

Switching is simple and usually painless provided you understand the difference between the myriad tariffs on offer,... and that not all price comparison sites display their tariffs in the same manner. ... Some price comparison sites will only show their ‘favoured’ sites which may not necessarily be the cheapest for you. Other sites will include ‘cashback’ offers in the overall price comparison. It is vital that you look at the ‘whole of market’ when assessing the various tariffs. The Citizens advice comparison tool is a good starting point

Indeed. Most, if not all, of the comparison sites I've looked at give the option to show 'the whole market' as well as only those deals to which they can switch one (the latter obviously to their financial benefit) - but comparison of the comparison sites (!) indicates that they don't all have the same idea about what constitutes 'the whole market'! I wasn't aware of the CAB comparison tool, so will have a look at that now - thanks for bringing it to my attention.

Some comparison sites like to show you various tariffs but only compare them with SVT because it generally shows that an ‘eye catching’ saving that can be made,....even though any sensible person wouldn’t let their tariff drift onto an SVT before doing something about it. .... Citizens Advice comparison site (unlike most of the other comparison sites) don’t have ‘favoured’ energy companies and they do not earn commission from customer switching,... It’s worth investing a little time trawling round the price comparison websites to see how they actually operate and it is vital that you understand the why’s an wherefores of any tariff/energy company you choose. The comparison sites can be something of a minefield for the unwary and one must never lose sight of the fact that they, with the exception of CAB, are commercial enterprises!,... learn about fixed tariffs/variable tariffs/exit fees/ length of tariff/tariff clauses e.g. mandatory smart meter et al.

Indeed. I'm adopting a very cynical/sceptical approach to the comparisons, and am taking absolutely no notice of the 'savings' they talk about - I am simply using the sites to get the relevant basic tariff information and then undertaking my own comparisons (as above).

Some energy companies offer ‘cheaper’ tariffs that are dependent on you agreeing to have a smart meter installed,...however they not always up-front about that sneaky clause on their website.

Indeed. To be fair, even my current 'big 6' supplier (E.ON) has slipped that it as a condition of all the renewal options they are offering me other than the SVT. However, I would wish them luck in getting a usable GSM signal in my house

Thanks again for you valuable input.

Kind Regards, John