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I'm on a fixed plan - Will the price cap increase affect my direct debit amount?


I moved to OVO earlier this year and I'm on the Better Smart Plan, I queried why my direct debit has gone up 50% this month and below is the reply. I understand if I'm using more than the original estimate my DD needs to go up but the response seems to suggest prices can change.

Hi Andrew,

Thanks for getting in touch with us. 

You are on a fixed contract but the price is not fixed the unit rate and standing charge is this means that the price can vary due to the energy market at the time and also the usage of energy.

Due to the 54% increase this would be why your DD price has increased to £146.

 

Surely the whole point of fixing is to prevent price changes? If the unit rate is fixed unless there is a change to tax surely it should stay the same?

 

I'm not understanding this explanation at all.

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Best answer by Jess_OVO 7 April 2022, 12:59

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Updated on 14/12/23 by Tim_OVO: Ofgem’s energy price cap limits what you pay for gas or electricity on a variable rate plan. Find out how it works – and how it affects your prices with our price cap guide.

 

You can also see the latest information regarding the price cap levels and date changes on the Ofgem site here.

 

I’m so sorry for the confusion there, @Divert2.

 

Whilst there has been a recent price change on our Simpler Energy plan, this won’t affect our members currently on a fixed plan. As you mention your unit rates and standing charges on this plan are guaranteed for the length of this contract. I’m really sorry for the agent error in advising otherwise. 

 

Whilst the price you pay per unit doesn’t changed on a fixed plan, we’ll still review your monthly payment amount based on any changes to your projected usage figures. This means that if when we review your Direct Debit amount you’ve been using more energy than we’d expected you to, we’ll suggest that you increase the payment amount to ensure that energy costs are being covered. If you’ve recently joined OVO it may be that your actual usage figures are higher than we expected when you first joined. There’s more details on our Direct Debit review process over here:
 

 

 

Let us know if this helps explain things. 

Thanks for the reply Jess, that's what I thought the increase was for. Thanks for clarifying that for me.

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I’ve just looked at MyOvo portal and it is suggesting that my standing order should be increased by a lot, or I will be in debt to the tune of £511. I am electricity only...

_BUT_ my unit rate is 27.84p/kWh, Standing Charge is 36.11p/day and the estimated anual usage is 2599 kWh.

When I calculate this out it comes to £855.36 for a year which is £71.28/month and my current Standing Order is £70. I am already £108 in credit and supposedly getting 5% interest on my credit balance so:

What am I missing? where does the £511 debt come from?

PhilipJ

Userlevel 7

Hi @PhilipJ451 and thanks for posting this. 


We’ve made a guide on the factors involved in estimating a monthly payment amount here:

 

 

If you’re on a fixed plan, we’ll aim to get you to a £0 balance by your contract end date. Otherwise you’ll be on the Simpler Energy plan, the variable rate where the prices are set to increase on October 1st. More info on this and available support, here:

 

 

That looks at the next 12 months of usage and costs. Higher prices will mean a debt unless the payment amount is increased. You can see this visualised here:

 

https://account.ovoenergy.com/payments/direct-debit/calculator

 

Hope this helps,
Tim

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We’ve made a guide on the factors involved in estimating a monthly payment amount here:

 

 

If you’re on a fixed plan, we’ll aim to get you to a £0 balance by your contract end date. Otherwise you’ll be on the Simpler Energy plan, the variable rate where the prices are set to increase on October 1st. More info on this and available support, here:

 

 

That looks at the next 12 months of usage and costs. Higher prices will mean a debt unless the payment amount is increased. You can see this visualised here:

 

https://account.ovoenergy.com/payments/direct-debit/calculator

 

So is the Direct Debit calculator for those on the variable rate plan now taking account of the higher unit rates from 1st Oct.

Even though the higher unit rates from 1st October can't yet be see on myOVO? 

Userlevel 2

Hi Tim_OVO and thanks for your reply. This is the kind of information I was hoping to find but I just couldn’t think of the right phrase to search for.

I will echo the question from Jeffus in a different way; is the £520 debt predicted for my account because of the expected rises in prices over the next 12 months ?

I wouls also say that the link to “Price cap changes...” has a number of comments at the end some of which suggest that you should be clearly printing the unit prices and standing charges rather than a generic annual per household estimate.

For info, I am on the “Simpler Energy” plan, do you know what the unit rates (and standing charge) will be changing to in October? If no, then when will we all know?

regards

PhilipJ

 

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Hi Tim_OVO and thanks for your reply. This is the kind of information I was hoping to find but I just couldn’t think of the right phrase to search for.

I will echo the question from Jeffus in a different way; is the £520 debt predicted for my account because of the expected rises in prices over the next 12 months ?

I wouls also say that the link to “Price cap changes...” has a number of comments at the end some of which suggest that you should be clearly printing the unit prices and standing charges rather than a generic annual per household estimate.

For info, I am on the “Simpler Energy” plan, do you know what the unit rates (and standing charge) will be changing to in October? If no, then when will we all know?

regards

PhilipJ

 

@PhilipJ451 

OVO have said they will give a minimum 10 days notice for the new rates prior to 1st October.

You can already see the rates ofgem have calculated. They vary by region. Of course suppliers can decide to charge less but i doubt they will by anything material.

Money saving expert has put the regional rates on their website so these will be a very good proxy for now. 

https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/#tool

Userlevel 2

Hi Jeffus,

thanks for the info, I’ll take a look

regards

PhilipJ

 

Userlevel 7

I’m on Simpler, my recommended payments from October are much higher so I’d say the calculations involved are factoring in a likely increase in costs.

 

It’s tricky to know what’s happening under the hood as this is a billing platform made by Kaluza that makes these predictions. I’ll try and find out the answer and get back to you. As we can be confident that prices for Simpler plan customers will rise in October, it certainly makes sense that they’re predicting it for those months...

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I’m on Simpler, my recommended payments from October are much higher so I’d say the calculations involved are factoring in a likely increase in costs.

 

It’s tricky to know what’s happening under the hood as this is a billing platform made by Kaluza that makes these predictions. I’ll try and find out the answer and get back to you. As we can be confident that prices for Simpler plan customers will rise in October, it certainly makes sense that they’re predicting it for those months...

I suspect it is just factoring the known ofgem price cap rates for Oct and that OVO are simply going to charge at the limit of the regional price cap.

It is interesting though as OVO hasn't actually published what new rates they are going to charge. So it feels a bit strange the rates have been loaded into the direct debit calculator somewhere but customers can't see the rates. 

Be good to confirm it is no making any assumptions about the cap in Jan, April, July. I assume not.

Am curious to know if this is a new feature or if the same thing happened at the April cap. 

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Following the announcement by the PM today, the price guarantee limit of £2,500 will apply through to late 2024 when a general election must be held by.

This still represents an increase of circa 30% on the April 2022 price cap.  While this is an improvement of the Oct 2022 price cap announcement by OFGEM it will still represents a huge challenge for many households this winter.  we’ve been shielded from the full extent of these rising prices by a very fine and warm summer when we use little fuel for heating, but prices this winter will be approximately double those of last winter. Details on the exact increase to apply to bills will have to be worked out quickly as the new price cap, although now superseded, was due to commence from 1 October 2022.

There was no mention of customers who had signed up to fixed price deals that will now face higher contracted payments than the guarantee.  Perhaps the guarantee will apply to them too - who knows as the detail was missing.  Martin Lewis is already campaigning on the issue.

Recent demands for customers to pay higher direct debits will probably need to be scaled back as the new prices under the “Price Guarantee” will be lower than under the Oct 2022 price cap.

Hi,

Martin Lewis has just confirmed, anyone who has signed up to a fixed deal higher than the subsidised rate announced today, can switch to the new subsidised rate without paying any exit fees .

He got this info directly from the Secretary of state for Business.

Therefore I would expect OVO to be making this known shortly to all impacted customers like myself .

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Hi @LDurks ,

Thanks for your comment. I’m one of the forum volunteers here. I can’t speak on OVO’s behalf.

This will take some time for OVO to produce a response but I’ve no doubt one will be posted. Would you be OK to hang in there for a few days?

Yes absolutely appreciate OVO staff may be quite busy today following the announcement 

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Thanks for understanding! :)

Yes. Very, very busy! We’re also bracing ourselves on the forum just in case. I’m part of a group of around 10 or so forum volunteers who patrol the OVO Forum on a regular basis, and you wouldn’t believe how hard it’s been for us to keep up with the last two weeks!

Userlevel 7
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Obviously a constantly changing situation, but an interesting latest development being reported by Martin Lewis:

IMPORTANT FIXED TARIFF INFO: I'm hearing fixed tariffs will have the same unit rate reduction as variable tariffs (ie roughly 30% off). So it looks like, unless you fixed at over the new Oct price cap level, your fix will be cheaper than moving to variable. More to check on this

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Wow. Personally, I’m actually happy with my current tariff rates which are more than 90% cheaper than the current price cap, let alone the next one! I don’t want to be greedy about it, so I’d happily opt-out of that 30% reduction if it’s an option. Seriously, I really don’t need it to be cheaper than what I currently have!

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Opting out is likely to result in a "computer says no" outcome.

Possibly appropriate to post this? https://www.nea.org.uk/donate/

Userlevel 7
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True. I guess everyone except me would want to take the discount. Oh well.

I guess I could donate something towards that fund. But there’s definitely one campaign that I won’t ever be giving any money to...

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@Blastoise186 Like you my current 2 year fixed tariff would have been substantially lower than the October Ofgem cap and will be lower than the Liz Truss cap though I have marginally over paid since April for that privilege!  Since we will ALL be paying into the foreseeable future (i.e. 10-15 years) for what is being made available now, I think I would welcome the reduction as a down payment.

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True. When I think about it, since I’m planning to start scuba diving soon, a bit of extra spare cash would be nice.

I think even fixed rate tariff rates can be dropped under certain circumstances. VAT seems like a pretty obvious one!

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Scuba diving will make a nice change from all this plate spinning!

Hi, I have signed up for a 2 year fixed tariff commencing on 11/9. Should I cancel or will OVO have alternative rates on their site prior to Sunday, as it is fairly short notice?

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Hi, I have signed up for a 2 year fixed tariff commencing on 11/9. Should I cancel or will OVO have alternative rates on their site prior to Sunday, as it is fairly short notice?

Hey @Curious James ,

I’d wait for now because OVO is likely to post an update soon. In the meantime, it’s probably best to keep that fixed deal.

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Scuba diving will make a nice change from all this plate spinning!

Yes! Especially for someone with Autism like myself. :)

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