Why is the standing charge for electricity increasing so much? How does the price of the standing charge relate to the price cap changes?

It feels to me that this is profiteering.

Am I wrong?

Hi @grahamejames ,

I’m Blastoise186, one of the forum volunteers and an OVO member. Just so you’re aware, I don’t work for OVO myself so everything in my comments is my own personal opinion.

There is no profiteering going on here, more recovering losses combined with increased supply costs. All the 30 odd suppliers that went down last year have to have a ton of their costs covered somehow and the suppliers that took on their customers are entitled to claim back the costs of doing so. These are then recovered through Standing Charges. Normally, it’d maybe be just a couple of Supplier of Last Resort claims per year but the last year has crippled so many suppliers, it’s caused a surge in such claims. This is ultimately one of the reasons that standing charges have shot up so much. The Ofgem Default Tariff Cap for the April 2022 to September 2022 period has been adjusted to allow for this, which means Ofgem is allowing it.

It’s critical to remember that the price cap is NOT a subsidy and is meant to be fair on suppliers as well as customers. If a particular price cap period causes all suppliers to make huge losses, Ofgem may use the next one and/or a future one to allow suppliers to recover them at Ofgem’s discretion and that’s what has happened here.

Profit margins are already razor thin in the energy market anyway. It’s unhealthy to squeeze them even harder.

We’ve posted a topic today, to reassure members who are on our Simple plan of what they need to do ahead of tomorrow (spoiler alert: if you have a smart meter, you don’t need to do anything): 

Any questions, leave a comment here or on that new topic!

:) 

customers on cheaper  companies that went bust should bear thir own transfer cost as they were subsidised by standard tariff customers.

Why cannot OVO lobby ofgem to place cap on green levy as 23%  on electricity is extortion and its doubtful the green levies are ring fenced  and is an interest free loan to the utility

How much will my OVO energy rise .

Hi @stephen hilton ,

I’m afraid no-one can predict this for you, as it very much depends on your individual circumstances. If you’re on a variable rate tariff, the new tariff rates should now be available via -MyOVO or you can give the Support Team a call and they’ll locate the active rates.

As @Blastoise186 has mentioned your energy prices will depend on your current energy plan, @stephen hilton .

Have you managed to log in to your online account to check your current unit rates and standing charges on the ‘Plan’ page?

If you’re on our Simpler Energy plan, your prices aren’t fixed but will be protected by Ofgem’s Variable Price Cap. We’ve got more information on what this means on our FAQs.

I hope this helps.

Hi there, my plan is the Ovo Members Special which comes to an end in October. Does anyone know what might happen other than being offered another fixed and more expensive plan?

And does upgrading to Ovo Beyond insulate you from the energy cost increases?

Many thanks, Meriel

Hi @merielalice and welcome to the OVO online community,

A really important question to ask now you’re nearing the end of your current plan. If you’re in the final 7 weeks of your current plan you’ll be able to check your renewal options by logging in to your online account.

As explained in the guide above energy costs have been rising recently, whilst we can’t offer assurances as to what might be the best option for you we’d recommend catching up on the advice fellow OVO members have given in the topics below.
 

As you mention the possibility of upgrading to OVO Beyond, it’s important to clarify that this is an add-on to the plan you opt for and as such wouldn’t affect your energy prices. You can read more about OVO Beyond and what’s included in the guide below.

Thanks

Can you please explain why the increase to the price cap kWh charge were applied to my account on 24 March and 24 September respectively when they came into effect on 1 April and 1 October?

Hey @LordVader1964,

Sorry for the issues you’re having.

Can you send us a screenshot of your statements (you can remove any personal information) so we can look into this further for you? These will show the rates that you were on and what dates they changed. 

Let’s get to the bottom of this!

With no explanation at all a 21% jump in electrical fixed charges - against a backdrop of at the most 10% inflation.

Why are we all coerced into this??

The price-capped standing charge will increase on 1 April from 46p/day to 53p/day including VAT. That’s a rise of just over 15%.

While standing charges were invented to cover the fixed costs of delivering energy (e.g. the installation, maintenance and renewal of the pipes, pumps, cables, switchgear and meters required), they have also in the past couple of years provided a way to cover the costs involved, for example, in bailing out customers of failed suppliers. Most recently, they have been adjusted in response to the government’s Robin Hood policy of bringing down the rates charged to consumers with pre-payment meters.  

The standing charge currently represents almost 7% of the total cost of electricity for the average household. From 1 April, it will still be less than 8%.

What would you rather see?

Regrettably you are incorrect the standing charge that I have been informed id from 50.66 to 61.67!!

a 21% increase!!

Standing charge varies by region and payment method. So i can only guess this is what you are seeing. 

OFGEM set the maximum standing charge by region and payment method for the default priced capped variable tariff.

The cost for each region is different for both unit rates and standing charges. Some regions will be a bit less than the average across the country, some a bit more.

We may see dramatically different pricing at  very local level as we transition to net zero and time of use tariffs. 

There are no government plans to smooth regional differences in standing charges or unit rates. 

Is it worth taking up the OVO offer of contract renewal when all the experts suggest holding out and see what happens at the end of June 2023

Lots of questions on this @Rogers2 and it’s not easy to come to a conclusion is it?

Its a bit of an each way bet, either to fix or wait. But obviously up to you

My Standing charge is increasing also to £61.89 - a 21% increase. 

This despite, many attempts to reduce electricity consumption.

Dear Ovo, if you are committed to Green Energy, why has gas standing charges on my account only gone up by 0.63p???  

I think all your customers are waiting for electricity prices to genuinely fall, rather than placing a loss adjustment on standing charges. 

Yes, some of us are in receipt of Government benefits, but for all the talk of gas price increases, and delivery costs from alternative sources, I cannot fathom why this standing order levy has been applied in this way. 

Hey @Crafyrose,

Thank you for your question,

@Jeffus has given a really great response here:

Maximum standing charges are set by OFGEM, not OVO, you can find out more about the Price Cap increases here.

April to June 2023 - are we getting anymore Gov money I am Pensioner and Disabled - I am confused?

If you’re talking about Cost of Living payments that are the Energy Bill Support Scheme, Alternative Fuel Payment or Warm Home Discount, then those are finished now and they’re closing down - WHD will be back later this year.

All others are beyond OVO’s control. The DWP will let you know when they’re coming

I thought the £66/£67 per month was being kept for a further 3 months to June 2023?

Nope, it’s gone. That scheme ended on the 31st March

Hi @sugarboat it is the Energy Price Guarantee that is being kept for a further 3 months. This caps the unit price of energy. 

The £66/£67 was the Energy Bill Support Scheme. This finished in March unfortunately. 

This is the list of support for 2023/2024.

Take a look at the disabled section as you may get a payment over the summer. 

Also the winter fuel payment section.

If you get pension credit, there is a separate bit about that. 

https://www.gov.uk/guidance/cost-of-living-payments-2023-to-2024