Spring is in the air and as the nights get lighter, families who have struggled through the winter will be looking forward to lower energy bills for the next few months.
The clocks go forward this Sunday - March 26 - and this marks the time when many households aim to switch their heating off for the summer, but energy experts are urging people to think twice before following advice on social media which could plunge them into another winter of misery, with experts cautioning against well-meaning tips on Facebook and Twitter discussion pages devoted to budgeting.
Last summer, the internet was awash with self-styled experts advising householders to just pay for what they used, as families who had not given energy much thought until the cost of living crisis turned to social media to try to understand why their energy direct debit payment was higher than the amount they were using. And who followed the advice to cancel their direct debit payment in the summer may well have found their decision came back to haunt them in the colder months, when their bills were much higher than they would have been paying had they stuck to their original direct debit payment.
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Ian Thompson, of Energy Support and Advice UK, a Facebook group set up to support people struggling with their energy bills, said: "There has been a troubling trend emerging regarding people being encouraged to “pay only for what you use” to their energy companies as opposed to their monthly budget direct debit plans. While we absolutely understand the need and actively encourage financial budgeting, we think this trend will cause significant issues for customers going into next winter.
"It’s long known that monthly direct debit payments are calculated to overpay during the summer months to allow an account credit to accrue to soften the blow of the high energy usage and therefore high bills over the winter months. We feel it’s important to maintain these monthly direct debit budget plans to be as prepared as possible for the autumn and winter of 2023. Most companies will offer variable monthly direct debit as a payment option, but this requires very regular meter readings and strict budgeting."
The group, which has over 150,000 members, is urging members to think ahead, even if they are paying more than they use in milder months. Ian said: "Cancellation of direct debits and paying in full on receipt of the energy bill is the most expensive way to pay for your energy. This is particularly important to consider with the end of the Energy Bills Support Scheme (EBSS) with no plans from Government for it to return. While it’s anticipated the Ofgem price cap will fall further below the current energy price guarantee levels from July , it’s still important that consumers are well prepared for the next winter ahead.
"We are continuing to highly recommend strict budgeting and understanding exactly where consumers are using their energy to reduce the impact of these costs. We have some very focused tools to help consumers to streamline these areas as much as possible. We are working very closely with Snoop, a free money management and budgeting app, and Ivie, one of the leaders in energy saving technology and advice."
His advice was echoed by Money Saving Expert Martin Lewis, who has warned people against looking at a short-term cash flow gain against the longer-term cost increases of paying your bills as they come in. During an appearance on This Morning, Martin took a call from an Ovo energy customer who was considering cancelling her direct debit and he told her it could end up costing more in the long run.
Martin said: "The reason I say I don't want you to cancel your direct debit is if you move into payments into receipt of bills. That is what most people do when they cancel direct debits. That is around 8% more expensive. You will pay 8% more on top of the already huge rates to pay your bills."
A lot of the 'advice' came during the summer months when you would gain by just paying for what you use. In the winter, doing this will put a lot more strain on your family budget and you could find the winter bills a real challenge unless you budget for them yourself. Direct debits work by smoothing out the variations in your bills over the whole year. Your energy supplier will look at the amount of energy you are likely to use over the whole year and estimate the cost based on the current tariff and any increases expected. This amount will be divided by 12 and you will pay the same amount every month. Your energy bill can vary a lot between summer usage, when you are unlikely to have the heating on and won't use as many lights, and winter usage. Paying by direct debit means you pay the same amount every month, regardless of the amount used, as long as your total usage stays within the original estimate prepared by your energy company.
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