According to Cornwall Insight, some energy suppliers are adopting winter weighting to reduce debit balances.
Over the last few years, Cornwall Insight has recorded an increase in the number of suppliers implementing a winter weighting to their direct debit payments. This is where suppliers charge customers more for energy over the winter months and less in the summer months to help them manage their cashflow.
With the colder weather setting in, this year has proved no different with a few suppliers announcing their intentions to increase funds taken from customers to cover the higher costs that are incurred over the winter period.
Winter weighting announcements
Igloo Energy said it automatically applies an uplift for customers that joined between 31 March and 1 August to cover October-April. Pure Planet has reminded customers that direct debits will increase in October.
Outfox the Market said last month it would apply a winter weighting to direct debits, where 70% of customers’ annual consumption is paid during October-March, and the remaining 30% is paid during April-September.
Just before its exit, Toto Energy contacted its fixed-price customers about additional opt-out payments in September and October.
Kate Hill, senior analyst at Cornwall Insight, said, “Winter weightings have been introduced by some suppliers to help them better manage higher consumption rates. For example, a customer starting a contract in the spring/summer is likely to remain in credit throughout the year. However, those starting a deal in the winter months are more likely to build up a debt. Therefore, incentivising some form of winter uplift to help reduce the levels of customer debt.
“Suppliers implementing such an uplift tend to be on the smaller size and while some apply the weighting to customers joining at a specific time. This year, most are taking a blanket approach to implementing winter weighting irrespective of when a customer’s tariff began (except for Igloo Energy) which could result in higher credit balances.”