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Tuesday, 4 September 2012

Utility Accounts In Credit

This is an age old complaint, but worth repeating in these troubled times.

My gas and electricity supplier does not allow payment of its bills by variable direct debit, like the telecoms providers do. Instead, it insists on a direct debit of the same amount throughout the year, regardless of my creditworthiness. In this way, the supplier ensures that it builds up a nice credit ahead of the main winter bills in October, January and April. In my case, that's a credit of over £500 in June, and over £1,000 by the end of August. 

That credit arrangement has nothing to do with supplying energy to me directly, because it hasn't supplied me with the energy yet - hence my 'account' is in credit. In fact, if I was paying by credit card or debit card, they wouldn't be able to charge me because they haven't yet performed the service. But they would sure find a way to recoup the 'lost' value of the credit arrangement in the prices they charged me for paying as the energy is used.

Meanwhile, the need to provide 0% up-front finance for energy companies operates as a steady drag on consumers' cashflow - particularly for those in the 'squeezed middle', who can afford the bills when they come around, but need to minimise interest on credit cards etc in the meantime.

So why should the supplier be allowed to build up so much credit? 

Why can't they be obliged to use variable direct debits, except perhaps where missed payments have occurred?

And if it is allowed to build up credit, why shouldn't the supplier be obliged to segregate the funds it is holding against my future bills from its own money, and account to me for interest received? 

Of course, the same can be said for the funds taken on direct debit by the TV licensing authority.

The government needs to start thinking like a citizen rather than a supplier.


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