Think of it like a separate bank account. You pay a fixed amount into that account each month and the energy bill is paid from that account.
Some months the energy bill will be lower and the account balance will go up.
Some months the energy bill will be higher and the account balance will go down.
After a year, it should all have averaged out and all the money paid into the account will have covered all of the energy bills.
edit: Just looked up their website. They make a big deal of "no standing charge" but you have to pay a monthly membership fee. For average usage that monthly fee works out at 35p per day. Surely that's just a "standing charge" by another name?
Rename to "Outfox the Customer"
That's also normal, although a more common practice is to charge a higher rate for the initial x units. There's always a standing charge, it's just that most suppliers obscure it and claim they're not charging it.
The monthly direct debit might or might not be accurate. At one point, my overpayments reached about £800. I didn't care, so I did nothing about it. Your description of it as being like a seperate bank account is a good one. I could have moved the overpayment money from it to my main bank account, but why bother? Neither pays interest and it made no difference to me which account it was in. I don't even know how much my overpayments are now.
So my understanding is that they work out your usage spend based on the kWh or amount you provide them during the sign up so if you pay £900 a year for electricity and gas then the monthly direct debit bill will be £75 but if some months I only use £60 then they will credit £15 back on the account however if I use £85 then I owe them £10, will that £10 be deducted from the credit on the account?
That depends on what you mean by "the account". You would have 2 accounts - a bank account and an energy supplier account. In your example, £75 a month would be transferred from your bank account to your energy supplier account. The billing period would probably be quarterly, so I'll use that in this example:
Month 1: Your energy supplier account now has £75 in it.
Month 2: Your energy supplier account now has £150 in it.
Month 3: Your energy supplier account now has £225 in it.
Your quarterly energy bill is now created. It's for £165.
The £165 is taken from your energy supplier account to pay the bill.
Your energy supplier account now has £60 in it.
Month 4: Your energy supplier account now has £135 in it.
Month 5: Your energy supplier account now has £210 in it.
Month 4: Your energy supplier account now has £285 in it.
Your quarterly energy bill is now created. It's for £130.
The £130 is taken from your energy supplier account to pay the bill.
Your energy supplier account now has £155 in it.
Etc. Ideally, the surplus built up during quarters of less energy use will be about the same as the extra cost incurred by using more energy in other quarters.
The money in your energy supplier account is still your money. You can have it transferred back to your bank account if you want. Some energy suppliers will do it automatically if there is a high enough surplus in your energy supplier account. Usually, the amount of the direct debit will be varied if there's a surplus or deficit. So if you were transferring £75 a month to your energy supplier account and it turned out that you were only averaging £60 a month of energy over the year and had built up a surplus of £180 over a year, your direct debit might be adjusted to £60 a month, or maybe to £50 a month until the surplus was reduced and then to £60. Or maybe not. Sometimes energy suppliers don't do that. You would also be able to change the amount of the direct debit yourself if you want to, almost certainly via the energy supplier website.