How is the water company calculating my monthly direct debit?

Posted by romeo__golf@reddit | AskUK | View on Reddit | 25 comments

I pay my water bill by 6-monthly bill, largely because I can pay by credit card and get airmiles in the process, but I'm completely thrown by how they calculate the expected direct debit if I were to switch.

In October my bill for 6 months' usage was £190.74, effectively just under £32/month, but they suggested a payment of £52/month.

This week I received another 6-month bill for £214.68 (£36/month) but they've suggested a payment of £57/month on direct debit!

I appreciate they might want to make the payment a little higher to allow for changes in usage, but these suggested monthly payments are 60% higher than my actual usage.

Does anyone have any insight into why they do this beyond "they just want to hold your money"?

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Whoppa-seagull@reddit

I expect they just want to sit on you’r money & let it accrue interest.

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Wits_end_24@reddit

My water company does the same. I'm on a fixed tariff and they still want to charge more than the fixed price. I have to phone up every time a bill is created to argue with them to reduce the direct debit.

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idris_elbows@reddit

Contact them- same happened for me, and they said "that's silly" and reset it to a much more sensible amount.

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geekypenguin91@reddit

The monthly amount is to pay for the future usage, and clear the debt.

You have over £200 of debt that needs paying off as well as the £32/month you're using.

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romeo__golf@reddit (OP)

Nope, my account is at £0 after making a payment on receipt of the bill. You're suggesting they want me to pay in advance for the usage I haven't yet made, which isn't how billing works. It's always in arrears.

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stickyjam@reddit

Send a new screenshot of what it says now it's cleared then? Or check once it's cleared at least. If you're looking before a payment lands it'll always look confusing

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romeo__golf@reddit (OP)

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stickyjam@reddit

So no longer asking for more? It might still want a smidge more at some point as water bills have risen year on year , so depending on when you joined this supplier might be making a bit of catch up.

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romeo__golf@reddit (OP)

Follow-up... I found the page and they're now asking for a DD of £20/month so you do seem to be correct! ....But they're apparently completely lost because if I did that, I'd be £80 or so in arrears by the time of the next bill again considering my actual bill is around £200 every six months! 🙄

I suppose the question still stands... how do the water companies calculate a direct debit? 😂

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stickyjam@reddit

Guessing how much you use, including how you pay , is a hard model if you clear your bill 6 monthly. Id be impressed if you got to keep a 20 quid monthly, must be very water efficient or just the way you pay confused their modelling

The key bit is any letters or emails are based off billable usage, and payments recently as a snapshot, at that exact moment.

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romeo__golf@reddit (OP)

The confusion is that when they sent the bill, the bill itself states I should set up a DD of £57 alongside owning the £200-odd; it doesn't say "You owe £200 but you can set up a direct debit instead" it says "You owe £200 now. We recommend you set up a DD for £57."

From other responses I think their intent is as you say, to set up a DD instead of making a single payment and that this will both clear the debt and provide credit for the next bill, but it's just very unclear and comes across as a money-grab from them rather than actually helping me budget.

Now that my account is at £0 there's no mention that I can see about setting up a payment as it just says "You won't owe anything".

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geekypenguin91@reddit

You might have paid it off now, but when the bill was issued you were £214.68 in debt. That's why it says you're £214.68 in debt.

They've calculated that to clear this amount in the next 12 months, plus your normal usage, that's how much you'll need to pay each month.

And no, that's not how DD works. You pay a fixed amount each month that builds up and account credit, which the bill is deducted from. The idea is that if you pay the recommended £57/month, this time next year your account will be at zero.

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romeo__golf@reddit (OP)

If that's how they're calculating it (which makes sense, btw) then at the very least they should make that clear. The way I read the bill was "You owe £x immediately, please pay it, and then set up a DD for £y" rather than "You owe £x, if you set up a DD for £y you won't need to make any additional payments". It's about as clear as mud.

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geekypenguin91@reddit

Maybe that's how you read it but generally that's how all bills work. They generally assume that people don't have a few hundred quid lying around to clear the debt

If you give them a call now you've made a payment then they'll set a DD nearer to your actual usage if that's the way you wanted to go (I know it's not)

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romeo__golf@reddit (OP)

The only other bill I pay which works that way is electricity and gas, but that makes a little more sense as your usage varies throughout the year with those, so you want some method of evening it out usually.

My phone bill is always payment for the previous month, for example, so I'd always assumed my water would be the same :)

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No-Revolution-3204@reddit

They're trying to get you to pay monthly and are suggesting a payment which will cover usage and the arrears that are showing on your account (because your 6 monthly payments are not being considered).

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ExcitementKooky418@reddit

I'm admittedly behind in my water bill, but went in Anglian water website to make a payment the other day and my 'recommended' monthly payments were about double my usage too, from what I could see it looks like they're trying to effectively get me to pay next year's bill in advance

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romeo__golf@reddit (OP)

This seems to be the case based on what others have said. Seems short sighted of them to not explain that rather than just making it look as though they want to hold your money on account for no reason.

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Every_Individual_25@reddit

Think it includes wastewater too but still a bit odd. I had a meter fitted, took the mystery out off my usage as I know I don’t use much at all. Went from £700pa to £100pa back in 2019. Rate was calculated on number of bedrooms rather than inhabitants. (Thames Water)

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