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How can I work out the percentage cost difference between the variable and fixed plans?

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Hi

I’m very confused math percentages etc have never been my strong point so I’m currently coming out of a fix price where I was paying £117 per month for gas and electric and now the cheapest fixed offer they have given me is £259! This Seems way more than the 30% Martin Lewis goes on about, the variable is cheaper at £189 but I’ve no idea if some months I’ll be paying more than £259!
I do have a smart meter but I don’t have the but I can actually see what I’m using I’ve been waiting a year for on.
can anyone help me understand please?

thanks

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Best answer by nealmurphy 8 June 2022, 09:40

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Userlevel 1

How do I calculate my price cap tariff?

Martin Lewis is talking about switching if a new fixed tariff is no more than 35% above my current price capped tariff.

Im currently on a Simpler Energy - Economy 7 Plan for electricity and a Simpler Energy Plan for gas.

Userlevel 7
+2

Hi @Slr75

It can be very confusing as there are a lot of factors at play here.

I’m going to ignore the £117/month amount as this is based on a historic low fixed tariff and may not accurately reflect your actual energy use (you could be paying more or less than your actual average monthly cost for a number of reasons).

If we concentrate on the two new quotes you have the capped variable at £189/month and the fix at £259/month. The fix is therefore around 37% more than the variable. Assuming the capped variable increases by 40+% in October then this would be slightly more than the fixed tariff monthly cost (you would however be paying less per unit of energy on the variable than you would with the fix up to October although this falls in the lower usage months over the summer so is less critical on bills than what you are paying over the winter). There may also be further increases in the variable tariff price during the course of the next 12 months.

As for getting smart meter data, you should be able to see this in your online account, or alternatively you can use third-party apps to display your usage in 30minute intervals.

Hope this helps. I’m sure others will be along to add some more useful information, but in the meantime if you have further queries please post them here.

Userlevel 7
+1

Hi @Slr75

I appreciate your predicament. I was also on a relatively cheap rate fixed contract until recently, i rolled onto the variable rate for now but may choose a fixed rate in the near future. The variable rate is nearly 3 times my old fixed rate.

You asked about whether you will pay more than £259 some months if you choose the fixed rate? The idea behind the £259 monthly direct debit is to smooth out the amount OVO ask you to pay each month via direct debit. Over summer you will use less than £259 a month of energy, over winter you will use more than £259 a month of energy. OVO will simply take £259 a month via Direct Debit each month. This is typical of energy companies now.

There is a but... obvious if it looks like you will use more energy than forecast over a year then your direct debit will increase over £259 at some point, if it looks like you will use less than forecast over a year your direct debit can be reduced below £259 at some point.

Did that make sense?

The quotes you have received will include a figure for your forecast gas and electric usage in kWh. Did you spot that when looking at the quotes?

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Userlevel 7

A really important question, @jdenver.

Firstly just to clarify, the Simpler Energy Plan is our variable tariff so the prices on this plan are protected by the Ofgem Price Cap you mention - read more about this here.

You’ll be able to check the current prices on this plan and compare them to the prices available on our fixed plans by logging in to your online account and heading to the ‘Plan’ page.

It sounds like you’re considering a similar renewal decision that’s been mentioned in this thread, so it might help to hear the advice our community have given over there.

I hope this information helps decide the best option for you going forward.

Userlevel 1

So is my ‘current price-capped tariff’ the figure I'm paying as a direct debit each month (which has just been increased)? That's what Im trying to find out.

Userlevel 7

Does this thread help with the tariff comparisons you mentioned, @jdenver?

Userlevel 7

If you’re looking to compare the costs on our variable tariff to the fixed options available, using the recommended Direct Debit amount or projected annual costs would work, @jdenver.

I’ve tagged you in another thread where our community members have given some great advice to help work this out. Let us know if you need any more help with the calculations. 🙂

Userlevel 7
+1

So is my ‘current price-capped tariff’ the figure I'm paying as a direct debit each month (which has just been increased)? That's what Im trying to find out.

@jdenver

You have to be a bit careful.

The quotes you see on the OVO website for a new fixed rate don't take into account any credit or debit you currently have on your account

So in my case the quote is £208 ignoring the credit which i think makes sense for comparison with other suppliers. It would be difficult to compare otherwise.

I am currently on the variable rate plan. I can't simply compare my current recommended direct debit with the £208 because i have deliberately built up a credit balance. My recommended direct debit on my Simpler plan is only £80 but that is only because i have built up a credit balance.

So i can't simply compare the £208 with the £80 to calculate the percentage increase which i think is what you are asking.

Does that make sense?

Userlevel 7

Great point, @Jeffus.

Has this helped work out the cost comparison calculations, @jdenver

Userlevel 1

Yes thank you.

Userlevel 7
+1

Yes thank you.

@jdenver

One other thing to be wary of is that the wholesale price of gas in the UK is still very volatile.

It shot up dramatically in the last couple of days. It may come down again of course. If it says high this will increase the estimated price cap in October and January. You need to think about that when doing any comparisons.

It is not an easy decision on whether to go for a fixed price plan. Just remember the Oct price cap level could well go higher than estimates you may see in the news and on websites.

The October price cap rates are currently due to be released by Ofgem on the 26 August 2022 based on previous years announcements