Eon shakes up direct debits to stop bill shocks
Energy giant Eon has reformed its direct debit system to stop customers being hit with huge hikes in their monthly payments.
The firm had come under pressure from lobby group Consumer Focus and was subject of numerous complaints on our forum after evidence of the huge payment demands emerged, which left many saddled with sometimes unaffordable bills.
The company has now acknowledged it was "causing problems" for some consumers.
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Why did payment demands soar?
The problem affected those who joined the company in the second half of a calendar year, and who paid their bills by monthly direct debit.
Direct debit customers usually pay 1/12th of their estimated annual spend each month, so households build up credit in the summer when they use less energy. This credit then pays for the winter months when they use more power.
Under its old system, Eon reviewed accounts each April to ensure balances were at zero. Where a customer owed money, their direct debit payments would rise, while customers in credit were refunded.
But those who joined towards the end of a calendar year would not have built up a credit during the summer, and would be in debt in April after bigger winter fuel bills.
So their direct debit payments would rise following the review, even though Eon could have clawed back the debt over the summer.
One of our forum users, johnsm13, said Eon upped payments from £115/month to £168/month at his last review after it emerged he owed £58, even though his estimated annual usage was £1,330, or £111 a month.
He added: "I can't afford such a big leap in my monthly payment."
What has Eon done?
Following pressure, Eon now says users will only be subject to an annual review if they have been a customer for at least 12 months to give them more time to clear a debt through normal direct debit payments.
The review could be at any time of the year, depending on when is suitable.
Archna Luthra, MoneySavingExpert.com consumer products analyst, says: "It's a victory for consumers that Eon has changed its system.
"While direct debit is the best payment option whoever your supplier, because you usually get around 10% off, the key to making the system work for you is feeding back regular meter readings to keep your bills as accurate as possible.
"If you think your direct debit amount is unfair, fight back and ask the firm to review it.
"Suppliers' licence conditions mean they must set fair direct debits and refund credits. Do be wary of asking for too low a direct debit, as that could mean you face a hefty bill at the end of the year."
Eon chief executive Tony Cocker says: "We recognise our policy was causing problems for some of our customers and so this is the first step in improving this."
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