How are direct debit energy payments calculated?
Confused about how your energy company calculates your direct debit payments? That's not a surprise, because there are multiple ways this can be done, resulting in drastically different payment calculations. Below we explain the different options used by energy companies and available to consumers.
Equal, Weighted vs Variable Direct Debit Payments
The three common ways of calculating direct debit energy payments are:
Method 1 (aka 'Budget')
- Often, but not always, called 'Budget' direct debits, with method 1 the energy company bases your payments on the cost of the energy they think you will use during a year, split into 12 equal monthly payments. This method spreads the cost of your energy equally over 12 months so you're not paying a lot more in the winter.
Method 2 (aka 'Weighted')
- Some companies (e.g. Outfox the Market) also have an option similar to method 1 in that payments are somewhat regular and smoothed, but payments are weighted according to winter/summer seasonality. Under the Weighted method, Winter Direct Debit amounts will be higher and run from October-March, say, and Summer Direct Debit amounts will be lower and run from April-September.
Method 3 (aka 'Variable')
- Often, but not always, called 'Variable' direct debits, with method 3 the energy company charges you for the exact amount of energy you’ve used in the month, no more, no less. That means you are likely to pay more in the winter and less in the summer.
Some companies give you the choice of how your direct debit payments are calculated (e.g. 'Budget' or 'Weighted' or 'Variable') while others do not. Essentially all energy companies offer the 'Budget' method, but not all seem to offer the 'Weighted' or 'Variable' options, as you can see in the following table:
Which energy companies allow fixed, seasonal and/or variable payments?
| Energy Company | Direct Debit Payment Calculation Options | ||
|---|---|---|---|
| Method 1: 12 equal payments | Method 2: seasonally-weighted payments | Method 3: variable based on usage | |
| British Gas | yes | no | yes (monthly or quarterly) |
| Bulb Energy | yes | no | yes (monthly) |
| Co-Operative Energy | yes | no | no |
| E (Gas and Electricity) | yes | no | no |
| E.ON Energy | yes | no | no |
| Ecotricity | yes | no | yes (monthly) |
| EDF Energy | yes | no | yes (monthly or quarterly) |
| Good Energy | yes | no | no |
| M&S Energy | yes | no | no |
| Octopus Energy | yes | no | no |
| Outfox The Market | yes | yes | no |
| Ovo Energy | yes | no | no |
| ScottishPower | yes | no | yes (monthly or quarterly) |
| Shell Energy | yes | no | yes (monthly) |
| So Energy | yes | yes | no |
| SSE | yes | no | yes (quarterly only)* |
| Utilita | yes | no | yes (monthly) |
| Utility Warehouse | yes | no | yes (monthly) |
Do I need to give meter readings?
With the 'Variable' method it is clearly necessary to give meter readings, because charges are based on actual usage.
But it's also very important when using the other methods to give regular meter readings. This is because if your actual usage is different from what the energy company has estimated when calculating your regular (e.g. 12 equal or seasonally-weighted) payments, it might be necessary to adjust these regular payments up or down. Better to find this out early via submitted meter readings than after a lot of time has passed (as that could lead to a larger, more painful adjustment to your payments).
Can you pay energy bills quarterly, or is only monthly available?
For the most part, energy companies now only offer monthly payments, but there are a few still offering the option to pay quarterly.
Monthly energy payments can be more desirable for both energy companies and consumers as payments are smaller and more manageable compared to quarterly payments. But for many people, quarterly payments are preferable because they can spread out their meter reading submissions and only have to think about their energy bill 4 times a year, instead of 12.
For those who prefer quarterly energy payments, what are their options? See the list of energy companies below, which shows the energy companies providing the option of quarterly payments:
Which energy companies allow quarterly payments?
| Energy Company | Option to pay quarterly? |
|---|---|
| British Gas | yes (called 'Variable Direct Debit') |
| Bulb Energy | no |
| Co-Operative Energy | no |
| E (Gas and Electricity) | maybe (according to customer service) |
| E.ON Energy | no |
| Ecotricity | no |
| EDF Energy | yes (called 'Direct Debit Whole Amount') |
| Good Energy | no |
| M&S Energy | no |
| Octopus Energy | no |
| Outfox The Market | no |
| Ovo Energy | no |
| ScottishPower | yes (called 'Variable Direct Debit') |
| Shell Energy | no |
| So Energy | no |
| SSE | yes (called 'Variable Direct Debit')* |
| Utilita | no |
| Utility Warehouse | no |
You may have noticed that when paying quarterly, it's typically a variable payment calculation based on meter readings.
When paying a variable calculation, some companies allow monthly payments only (e.g. Bulb), other quarterly only (e.g. SSE), and some the choice of monthly or quarterly (e.g. British Gas).
Actual Reader Experience | Top Tip
One reader, who actually inspired this article after he emailed us asking if we knew which energy companies offer quarterly payments and direct debits based on actual usage, has let us know about his switching experience.
After reading our article he tried the EDF and Scottish Power websites, but neither showed a quarterly option. He decided to switch to EDF anyway because at least they offered a monthly exact sum option so he could pay for actual usage, even though online he was only able to opt for monthly payments. However, he then called up EDF and was able to request a switch from monthly to quarterly direct debit.
So the top tip here is, even if you don't see a quarterly option available online, you may be able to get this if you call and make a request.
Limitations
The data in this article was gathered by scouring company websites and contacting customer service via phone and/or webchat, where possible. We cannot guarantee that the information is completely accurate (e.g. in some cases we noticed conflicting information in different locations). In part, this is due to the turbulent state of the energy market and changing conditions. Many providers have removed their deals from the market; our data in this article may reflect what a company might offer or has in the past, even if they do not at the moment. Also, different options may be available to different customers. Please use the information provided above as a guide to help you find an energy company that is a good fit for you, but know that other companies may offer options we do not list. If you discover any different information as you get energy quotes (e.g. a company offers a quarterly payment option, but in our table we indicated they do not), please let us know in the comments section below so we can update the table for all. Real tariffs from real customers are ultimately the best information.
*Note: SSE was bought by OVO in 2020. As a customer is moved and their current tariff comes to an end, they can switch to an OVO tariff. Since OVO does not offer quarterly/variable payment options, current SSE customers on a quarterly variable tariff will find that they are switched to monthly, fixed payments. Technically, the SSE website implies they still offer quarterly variable payments, but in practice we think this option is no longer available.