Question

Fix my Tariff or go for the variable?


Hi, My fixed rate tariff is ending on 22/06/22, I have dual fuel, and have been an Ovo customer for many years. I have been offered 2 fixed rate deals, a 1 year, and a 2 year, both of which are much higher than the present cap. I could take a deal, or just let it go to the Variable tariff.

My question is though, if I do go to the Variable tariff, will the Fixed rate offers disappear as soon as my current tariff ends on the above date?


3 replies

Userlevel 7
Badge +3

Hi @elddisvogue ,

I’m Blastoise186, one of the forum volunteers. :)

It’s worth noting that fixed rate deals are not affected by the price caps, however they do reflect the true cost of supplying energy and being on them helps to support OVO, especially in the current market circumstances.

I’m afraid those fixed rate offers you’re seeing now are only guaranteed for 30 days at most, but probably more like 7 days. Given the current price cap expires in about four and a half months from the time of me writing this comment, you’ll be unlikely to benefit much from the temporarily “lower” prices as any savings will likely be gobbled up by higher prices later on.

If you go for a fixed rate deal though, you’re guaranteed to lock in the same rates for the entire term, no matter what happens to the price cap. I’d suggest going for a two year deal now as you’ll have at least 14 days to change your mind fee-free and you’ll beat further price increases until June 2024. :)

In the longer term, you are on average far more likely to save more using these fixed rate deals than you will ever save in the short term by surfing the price capped variable rate tariffs that the Ofgem Default Tariff Cap controls. It’s also worth noting that the price caps will soon be very likely to get updated every three months rather than every six months, which may further erode any possible savings from them.

One last thing to note. The most widely known price cap is ONLY a national average and does not reflect the actual price caps that apply to your area. Your actual price caps could be higher or lower than the national average and this should also be factored in when making any decisions. Likewise, the fixed rate offers will also reflect differences in cost around the UK.

Userlevel 7

A really important question this one, @elddisvogue.

 

We appreciate it can be harder to make a renewal decision at the moment. 

 

 

My question is though, if I do go to the Variable tariff, will the Fixed rate offers disappear as soon as my current tariff ends on the above date?

 

To answer this one, whilst the exact prices you’ve been offer on our fixed plan options are subject to change, you’ll still be able to choose a fixed plan at a later date. 

 

 

There’s also more information on the Variable Price Cap and ways to find additional support on our website here.

 

I hope this helps work out the best option for you.

Userlevel 7
Badge +1

My fixed tariff recently came to an end and I let it automatically roll onto the variable tariff.

I still get the prompt to switch to a fixed rate if i want to.

You will get a variety of opinions on whether you should fix for piece of mind or go onto the price cap variable rate which is cheaper until at least October. The price cap is almost certainly going up in October as an increase is already baked in, but it is not yet clear by how much or for how long. 

It appears from ofgem today that their plan is to update the price cap every 3 months so October, January, April, July. I have mixed views about this as the price cap may become even more volatile for consumers due to short term blips in wholesale prices. 

As an example of the volatility, the UK wholesale gas price has fallen and bobbed along at a lower level for about a month now, in fact it is lower than before the Ukraine crisis started, but predicting the future is full of uncertainty....

 

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