23 April 2012, under
Money & Legal; More Money & Legal articles...
It all adds up!
Although most customers pay their bills every two months based on meter readings and estimates, it is actually possible to pay a set amount every month for gas and electricity regardless of the time of year and how much energy you use.
We’re not talking about those punitive plans for people that are behind on their bills either. These monthly payment schemes are only available to customers with accounts that are up to date.
It usually works like this. Your supplier looks at your consumption for the previous year, works out what it would cost in the coming year and then divvies it up into 12 equal payments - which are then nabbed from your bank account every month.
Even if you’re on a discount rate, you can still sign up to a payment scheme and there is no extra charge for doing so. The one thing to watch out for though is that suppliers tend to apply what they call a “tolerance” to the monthly payment amount. The tolerance is a bit extra on top of the monthly direct debit to cover unexpected usage – like last year’s big freeze.
Suppliers apply this tolerance in different ways, but in general, you can expect the monthly payment amount to be higher than if they just divided your year’s cost by twelve.
Here’s how the tolerance thing works. If you get your gas from (for example) Bord Gais and use around the national average, a year’s worth will cost you €876. If you sign up to their Level Pay scheme, Bord Gais will bung an extra 20%, or €175, on top of that and then divide it by 12 - so you could expect to pay around €88 per month.
Still, it’s not a bad price to pay for knowing how much your bill is going to be every month – and in the case of Bord Gais, they’ll only add the tolerance for the first 12 months.
With these monthly payment schemes, suppliers issue statements in place of bills, and depending on the time of year, you may be in credit or debit. Variations in usage from season to season mean that a debit doesn’t necessarily mean that money is owed on the account and a credit doesn’t mean that a refund is due. If the supplier has done their calculations right, it should all balance out nicely at the end of a year.
And the good news is that if an account is in credit after twelve months, the balance can be claimed back, or the credit can be used to reduce the monthly payment the following year.
Monthly payment plans are a pretty decent way to help with household budgeting and can relieve the worry of big winter bills. They work best if customers submit regular meter readings, know their annual consumption and make sure the payment amounts really reflect their household usage.
Customers should ask the supplier how they’ve worked out the payment amount, what the tolerance is and what usage they are basing payments on – this is where knowing your annual household consumption comes in very handy indeed. You can even prepare yourself by put that consumption into the bonkers.ie energy calculator and to how much it would cost on your tariff before talking to your supplier. Also very handy indeed.
And finally, here’s the plans from each of the suppliers – and if we were able to uncover any funny business, it’s in there too.
Available to Gas and Electricity Customers
Level Pay is available to gas and electricity customers and the payment amount is based on the previous year’s consumption. Accounts are reviewed once per year in July to make sure the payment amounts are accurate. Credit over €200 can be claimed back at the end of a year and lesser amounts are generally used to reduce payments in year two. A 20% tolerance is added to payments in the first year but is usually not applied in subsequent years.
Available to Electricity Customers Only
Although Airtricity supplies gas and electricity, their Budget Plan is only available for electricity accounts. New customers have to wait until they have completed a two month billing period before signing up to Budget Plan because Airtricity calculates the monthly payment amount based on electricity usage during this period. Airtricity reviews the monthly payment amount for Budget Plan customers four times per year, so it is possible that the payment amount may change frequently.
Available to Gas Customers Only
Flogas doesn’t supply electricity, so it figures that their Budget Plan is available to gas accounts only. New customers can sign up right away because Flogas uses Gas Point Register to calculate the previous year’s consumption. And what is the Gas Point Register? Well whenever a meter reading is created, or the supplier is changed, it is registered and recorded and all suppliers have access to this information. Payment is required by direct debit which is taken on last day of the month for all Budget Plan customers. Flogas includes a tolerance for some customers by calculating monthly payments based on their standard rate even if customers are on discount tariffs.
Available to Gas and Electricity Customers
Electric Ireland’s monthly payment plan is called Equaliser and is available to both gas and electricity customers. Payment by direct debit is required and amounts are based on the previous year’s consumption. We don't yet have any information on tolerances or eligibility so if you do, please let us know.
Simon Moynihan of Bonkers.ie
Bonkers.ie is a free price comparison and switching service that allows people to compare utilities and personal finance products and find the best deals on electricity and gas, broadband and home phone, savings accounts, current accounts, credit cards and personal loans.
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