Coming from another country, I always wonder why the two utility companies I have here in the UK, Thames Water and Octopus Energy, would calculate an amount that they think I should pay monthly, instead of just charge whatever I used last month. To me, the latter way makes much more sense and is the standard practice in the countries I lived before.
The amount they calculated seems to generate either a huge credit balance, or a huge underestimation. Thames Water changed my monthly bill from £29 to £7, and then to £17 over the course of a year and a half. Octopus Energy built up more than £200 of a credit balance (not sure if it's a result of the UK government energy gift credit last winter), then set a minimal amount of £61 monthly. They say the purpose is to make sure that the credit balance would be always be more than £100. Okay...but why? If I want to save money, I'd go to a bank.
I could see that it might make sense if the measurement is not as easy or accurate, but come on, it's the 21st century and the meter shows me my energy usage by the hour, surely they can calculate the exact amount rather than pull a random number out of nowhere?
Thanks. I didn't know Octopus supports that. That being said, billing the exact amount approach has been working fine for billions of people elsewhere, I guess maybe it's just a cultural difference.
Yeah that's undoubtedly part of it, but it's fueled (excuse the pun) by the vast Summer to Winter disparity in energy usage. My own energy bills are currently very low thanks to rooftop solar, but my house is very poorly insulated so I'm expecting my Winter bills to be 10 to 15 times higher than they are now once the temperature drops into the mid teens and my gas heating goes on.
Most housing stock in the UK is unfortunately just as badly insulated so people like to know they're not going to get massive unpayable bills in the Winter by paying more than necessary in the Summer.
Cultural and geographic difference, depending on what we're comparing to.
The UK system has the advantage (to the energy companies) that'd you're paying in advance which is great for their cash flow and reducing the odds of bad debt.