How energy suppliers set direct debits

You have a right to a fair direct debit, this is enshrined under energy regulator Ofgem's licence conditions. Firms must set it based on the best available information. Yet many people often, though not always rightly, feel they are being hard done by, so how do firms actually decide what you'll pay?
 

This has always been shrouded in some secrecy – at what point is a price change included, can they include predicted future hikes and more. Yet in July 2022, Martin and the Ovo boss called an energy summit, gathering together the chief executives of the big firms. One of the resolutions of that meeting was they agreed to be open about how they decide to apply the rules. This guide is the result of that co-operation – and updated with the latest info as of December 2023. 

There are big differences between firms, including how frequently payments are reassessed, how they factor in price changes, and how they deal with credit or debt balances.

By doing regular meter readings or having a smart meter that does it for you will help get your direct debit at the right level. But if you think your energy direct debit is too high, see our 'Is your  direct debit right?' calculator and your direct debits rights for what you can do about it.

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British Gas

British Gas says it only does one or two direct debit reviews a year – you can find out which if you have an online account. These do NOT coincide with it changing prices. So any price change won't necessarily mean your direct debit rises.

Instead, it looks at its current announced prices once they're in its system at the moment you have your review, and calculates based on those and only those (not any predictions).

It says it takes this approach to stop direct debits from constantly changing, but the risk here of course is if prices rise, and you're not due a direct debit review for months, your next increase could be far higher because you're having to play catch-up. Or, if prices fall, you could be paying more than you need to and end up with a big credit balance. 

Full info below, or you can see British Gas's explanation of how it sets direct debits.

British Gas's direct debit rules

How are direct debits (DDs) calculated?

Estimated annual costs divided by 12, with seasonal use factored in.

How often are they reviewed and when?

Once or twice a year, around the year or six-monthly anniversary of your payment plan starting. Check your next review by 'view payment plan' online.

When are price changes factored in?

It only changes DDs at the time of your review, based on its OWN announced prices at that time, once they're in its system.

 

It will ask you if you want to amend your DD when it updates its prices.

 

Can you adjust your direct debit? You can increase your payments, or make a one-off payment to clear debt, at any time through your online account or by contacting British Gas. However, you can only lower it to a recommended amount if it thinks you're paying too much after a review. Not happy? See how to challenge it.
How is debt or credit factored in? If you're in credit at the end of your 'plan year', it'll reduce your DD.

If you're in debt at the end of your 'plan year', it'll increase your DD to pay this off over the year.
How much notice is given for any change in DD payments? Ten working days.
If you're in credit, can you request a refund?

Yes, you can contact the firm and ask. There's no minimum, though it may ask for a meter reading first to check you actually are in credit.

Correct as of December 2023.

E.on Next

E.on Next reviews direct debits every three months, and will always review them when it has confirmed a price change. 

Full info below, or you can see E.on Next's explanation of how it sets direct debits.

E.on Next's direct debit rules

How are direct debits (DDs) calculated?

Estimated annual costs divided by 12, with seasonal use factored in.

How often are they reviewed and when?

Every three months, and when prices change.

When are price changes factored in? Once E.on Next has confirmed its new rates after a price change, it will review your DD and factor in the new costs.
Can you adjust your direct debit? You can increase your payments, or make a one-off payment to clear debt, at any time in your online account or by contacting E.on Next. However, if you think your DD is too high, you'll need to contact the firm. Not happy? See how to challenge it.
How are debt or credit factored in? Credit and debt are factored into your expected annual costs over the next 12 months – by adding or subtracting the amount to/from your annual costs, then dividing by 12 to get the level of your DD.
How much notice is given for any change in DD payments? Minimum 14 days.
If you're in credit, can you request a refund?

Yes, you can contact the firm to ask. It may ask for a meter reading first.

Correct as of December 2023.

EDF Energy

EDF says it only reviews direct debits every six months – you can find out when you're due a review in your online account. These do NOT coincide with it changing prices. So any price change won't necessarily mean your direct debit rises.

Instead, it looks at its current announced prices once they're in its system at the moment you have your review, and calculates based on those and only those (not any predictions).

The risk here of course is if prices rise, and you're not due a direct debit review for months, when that does happen, it could be far higher because you're having to play catch-up. That's why, while it may leave a sour taste in the mouth, when it contacts you once it has updated prices to ask if you want to increase your direct debit – which it says it will do – you may want to say 'yes'.

Full info below, or you can see EDF's explanation of how it sets direct debits.

EDF Energy's direct debit rules

How are direct debits (DDs) calculated?

Estimated annual costs divided by 12, with seasonal use factored in.

How often are they reviewed and when? Every six months from when your payment plan started. Check for the date of your next review in your online account.
When are price changes factored in? EDF changes direct debits at the time of your review, based on your estimated energy usage, the present prices that you're paying and any known future prices, such as announced price cap changes.
Can you adjust your direct debit? Yes, you can change your payment in your online account through the 'My Direct Debit' option. Or you can contact EDF and ask. We're just confirming what the limits are. Not happy? See how to challenge it.
How is debt or credit factored in?

If you're in credit at your review, it will be used to reduce your DD or will be refunded if it's over £150 and based on an actual meter reading.

 

If you're in debt, EDF will increase your monthly payments over the next year.

How much notice is given for any change in DD payments?

Minimum 14 days.

If you're in credit, can you request a refund? Yes, you can request a refund. It is normal, however, to be in credit at times throughout the year and receiving a refund for this credit may put you at risk of getting into debt. EDF will also require a meter reading if one has not been received recently to ensure the credit balance is correct.

Correct as of December 2023.

Octopus Energy (including former Bulb customers)

Octopus Energy says it reviews direct debits constantly. In October 2022, Octopus agreed a deal to take over Bulb. According to Octopus, it has now migrated all of Bulb's direct debit customers to Octopus so the below will also apply if that's you.

Full info below, or you can see Octopus's explanation on how it sets direct debits.

Octopus Energy's direct debit rules

How are direct debits (DDs) calculated? Estimated annual costs divided by 12, with seasonal use factored in. It aims to make all accounts have roughly a month's DD in credit by the end of April.
How often are they reviewed and when? Constantly – it continually reviews DDs in the background to ensure payments are on track.
When are price changes factored in?

Once Octopus has confirmed its new rates after a price change, it will factor in the new costs.

 

Can you adjust your direct debit? Yes, you can change your payment amount in your online account or by contacting the firm. It asks you to speak to it first if you want to reduce your payment, but your account is in debt. Not happy? See how to challenge it.
How is debt or credit factored in?

When your payment is reviewed, Octopus adjusts how much you pay – factoring in credit and debt – with the aim of you having roughly one month's credit by the end of April. 

How much notice is given for any change in direct debit? 

Minimum 10 working days.

If you're in credit, can you request a refund? You can request a refund at any time, but you need to provide a meter reading, or have a functioning smart meter, so it can check the refund won't leave you likely to get into significant debt on your account.

Correct as of December 2023.

Ovo Energy

Ovo (which now includes legacy SSE customers) reviews direct debits every three months, and will always review them when it has announced new prices.

Full info below, or you can see Ovo's explanation of how it sets direct debits.

Ovo Energy's direct debit rules

How are direct debits (DDs) calculated? Estimated annual costs divided by 12, with seasonal use factored in. It aims to ensure a zero balance by the end of winter.
How often are they reviewed and when? Every day in the background, but it will only update your payment every three months (if needed). It may also review and update payments when prices change. You can see your most up to date recommended direct debit amount in your online account.
When are price changes factored in?

Once Ovo has confirmed its new rates after a price change, it will review your payment and factor in the new costs.

Can you adjust your direct debit? Yes. You can increase or reduce your payment amount in your online account in the 'Payments' tab of your online account. You can reduce your payment by up to 10% less than the recommended amount and increase your payment to a max of £10,000/month.
How is debt or credit factored in?

Credit and debt are factored into your expected annual costs over a 12 month period which runs April to March.

How much notice is given for any change in DD payment?

Minimum of two weeks.

If you're in credit, can you request a refund?
You can request a refund at any time. You will need to provide a meter reading, or have a smart meter.

Correct as of December 2023.

Scottish Power

Scottish Power says it reviews direct debits constantly in the background, so you'll likely see your direct debit change in the coming days.

We've full info below, or you see Scottish Power's info on how its direct debits work.

Scottish Power's direct debit rules

How are direct debits (DDs) calculated?

Your annual costs divided by 12, with seasonal use factored in.

How often are they reviewed and when?

Constantly in the background, but it will only update your payment every three months (if needed).

 

When are price changes factored in? Once Scottish Power has confirmed its new rates after a price change, it will factor in the new costs.
Can you adjust your direct debit? Yes, you can increase or decrease your DD through its 'Direct Debit Manager' tool online, or by contacting the firm. There's no limit to the increase, but it says DDs can only be decreased to a certain threshold.
How is debt or credit factored in? Credit and debt are factored into your expected annual costs over the next 12 months – by adding or subtracting the amount from your annual costs, then dividing by 12.
How much notice is given for any change in DD payment?

14 days.

If you're in credit, can you request a refund? You can request a refund at any time. You can also choose to have any credit automatically refunded at each review. If not, it'll be included in your next 12-month payment plan and you'll pay slightly less each month.

Correct as of December 2023.

Shell Energy

Shell reviews direct debits at least every three months, and will always review them when it has announced new prices.

Full info below, or you can see Shell's explanation on how it sets direct debits.

Shell Energy's direct debit rules

How are direct debits (DDs) calculated?

Your annual costs divided by 12, with seasonal use factored in.

How often are they reviewed and when? Every three months from your first DD, and when prices change. You can contact Shell to find out when your next review is.
Are future price changes factored in?

Once Shell has confirmed its new rates after a price change, it will review your payment and factor in the new costs.

 

Can you adjust your direct debit? Yes, you can increase (by up to 60%) or reduce your payment in your online account – though it will ask you to call it if you want to reduce your payment by more than 20%.
How is debt or credit factored in? Credit and debt are factored into your expected annual costs over the next 12 months – by adding or subtracting the amount from your annual costs, then dividing by 12.
How much notice is given for any change in direct debit?

14 days.

If you're in credit, can you request a refund? You can request a refund or choose to lower your DD.

Correct as of December 2023.

So Energy

So Energy reviews direct debits at least twice a year, and says it will also review them when prices change.

Full info below, or you can see So Energy's explanation on how it sets direct debits.

So Energy's direct debit rules

How are direct debits (DDs) calculated? Your annual costs divided by 12, with seasonal use factored in.
How often are they reviewed and when? At least twice a year and when prices change (you'll be notified before a review and asked to submit a meter reading). It will additionally review if usage falls out of tolerance of the current DD.
When are price changes factored in? Once So Energy has confirmed its new rates after a price change, it will review your payment and factor in the new costs.
Can you adjust your direct debit? Yes, you can increase or reduce your payment in your online account. It says the limits will vary by customer.
How is debt or credit factored in? Credit and debt are factored into your expected annual costs over the next 12 months – either by adding or subtracting the amount to/from how much it forecast you'll pay for energy, then dividing by 12.
How much notice is given for any change in DD payments? At least five working days.
If you're in credit, can you request a refund? You can request a refund or choose to lower your DD.

Correct as of December 2023.

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