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March 2023- Simpler Energy Variable Plan VS Fixed

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I too am on the Variable Simpler Energy Plan and have received an email that the prices are going to increase. They say the prices are based on November 2022 wholesale prices which were extremely high, but are advising switching to a Fixed Tariff, which I assume is based on November 2022 prices.

Today the wholesale prices of energy are down 70% surely it must be better to be variable if the prices are going to drop, rather than tie myself into high November prices.

August 2022 £320.00 / Megawatt. March 2023 £44.50 / Megawatt.

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Best answer by Jeffus 24 March 2023, 16:38

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Emmanuelle_OVO
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Hey @Geoff Dickson,

 

Welcome to the OVO Online Community,

 

It’s completely up to you whether you choose to be on Fixed or Variable, a Fixed plan may be cheaper than current Variable rates and the main benefit of a Fixed Tariff is customers with fixed prices have peace of mind that their costs won’t change for the duration of the tariff. Whether it would be beneficial or not depends on what happens in the market.

 

Energy rates are significantly higher currently than they were pre energy crisis, Ofgem have announced that although there’s a decrease to the overall price cap, standing charges will increase. The average household price cap level for a Pay Monthly (PAYM) customer on a Standard Variable Tariff paying by direct debit is now £3,280, previously it was set to £4,279 per year. This means an overall decrease of £999. For Standard Variable Tariff PAYM on demand will go from £4,533 to £3,482. For prepayment customers the cap will go from £4,358 to £3,325. 

 

Currently energy bills are protected by the Energy Price Guarantee and capped at £2500. 

 

When the Energy Crisis hit, customers who were on Fixed contracts were paying significantly less than those on Variable contracts. 

 

It’s a really interesting conversation, thank you for bringing it to the Forum! 😊

Renewable Energy? Big Fan.
G
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Dear Renewable Energy? Big Fan.

Thank you for the reply, but all you are saying is what the OVO email has already told me, the energy price Cap does not protect you from from price increases if you use more than the price cap you still have to pay more IT IS NOT A CAP. What happens when the prices reduce as they should, as I mentioned Gas is now £44.50 per Megawatt, in August 2022 it was £320.00 per Megawatt, if I sign up for a Fixed Contract and the prices reduce (as they should) I will be tied into the exorbitant prices as they are today, (based on the wholesale price of Energy in November 2022).

I also do not understand why the “Standing Charges will increase significantly” the infrastructure for the system is already in place nothing has changed or is it pure profiteering.

Jeffus
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Updated on 14/09/23 by Abby_OVO

Hi @Geoff Dickson i don't work for ovo, i am just a customer like you.

As you say the wholesale prices have fallen recently so if they stay low, then the default variable rate will fall on 1st July when the next OFGEM window starts, to below the current fixed rate offer hopefully. 

Hopefully also if the wholesale prices stay low we may also see more choice and hopefully even lower fixed prices from suppliers. 

So it is a judgement call, fix now for certainty or assume there won't be any more global events that cause prices to spike again and stay on the variable rate for now. What do you think will happen to wholesale prices? Do you think they will spike again? 

I don't think there is a wrong answer. We can only all make a reasonable judgement call based on the risks we are willing to take. Many people fixed in October 2021 on what looked like high fixed rate offers but saved a lot as the variable rate shot up. The experts don't always get it right in terms of predicting the future. 

I think you are tempted to assume wholesale rates will stay low? Are you going to stay on the variable rate? 

As you say the Energy Price Guarantee limits the unit rates of gas and electric so that on average a typical consumer (12000kWh gas, 2900 kWh Electricity) would pay no more that 2500 a year now and 3000 a year from 1st July to 31st March for their energy usage and standing charges including VAT. If you use more energy you will pay more than the 2500 and 3000.

Ofgem set the standing charge maximum rates for the default variable tariff, so you could ask them for a definitive answer about why they have increased them this time. 

https://www.ofgem.gov.uk/publications/ofgem-announces-latest-quarterly-price-cap-update

consumeraffairs@ofgem.gov.uk

 

G
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Hi Jeffus. Thank you for your very comprehensive reply, I was on a fixed rate which finished in February 2023 and was transferred to the “Simpler Energy Variable rate” which didn’t look to bad to me by todays standards, not been on it a month and they are putting it up, and I am trying to understand why when wholesale prices are plummeting unless Mr Fitzpatrick is feeling the Pinch.

In actual fact my electric kWh price has come down by 0.64p but Standing has increased by 5.76p per day, Gas kWh price stays the same but Standing has increased by 0.63p per day.

I think I will stick with the variable and see where it goes, it should plummet but we will see Mr Fitzpatrick may need another Billion in the bank.

kopweb
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Certainly Martin Lewis seems to share @Geoff Dickson’s scepticism about the Ovo Fixed Rate offer: https://www.moneysavingexpert.com/news/2023/03/ovo-fixed-deal-after-months-with-no-deals/  Then again, I guess there is no love lost between him and Mr Fitzpatrick after their ‘fat cat’ spat.

The high ‘early-exit’ penalty of £150 (2.5 times more than previous schemes) does raise the question whether Ovo have gone early to stop customers switching easily from Simpler Energy Variable to more competitive fix offers that may be in the pipeline from other suppliers.

 

Firedog
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The high ‘early-exit’ penalty of £150 (2.5 times more than previous schemes) does raise the question whether Ovo have gone early to stop customers switching easily from Simpler Energy Variable to more competitive fix offers that may be in the pipeline from other suppliers.

 
I think you’ll find that there’s no exit fee for OVO customers on their standard variable tariff, so no disincentive to switch to another supplier. The fees you quote are for those who opt for the fixed-rate tariffs.

 

Noel | I have no official status; I'm just a volunteer who comes here to help other customers. My gear: Aclara SGM 1416-B Electricity-only E7 meter; Chameleon IHD3-PPMID-AAA
kopweb
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Sorry @Firedog, perhaps I wasn't clear. It was the exit penalty for the new Fix that I was talking about.

If I sign up for the fixed slightly lower rate, I would have to pay £150 to switch to any even lower fixed rate schemes which may be offered by other suppliers in the months ahead. That is, if wholesale prices continue to fall...

kopweb
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Hi @Geoff Dickson 

Just thought I’d let you know that I received email notifications that you had tried to reply to me, but your replies have disappeared from the forum. From the email summary, the only thing I can imagine could have led to a block was your self-description as “boring old...” Then again, maybe the forum filter is over-sensitive to the innocuous word that followed 😂

Having used the same phrase of myself on many occasions, I sympathise.

Blastoise186
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Just so you know, the forum is designed so that email notifications don’t go out for anything that was blocked by the AutoMod system. It is more likely that some comments got removed reactively by a moderator.

I can definitely say that it wasn’t me who removed the comments however. Forum volunteers such as myself don’t have that power.

Securing energy by zapping security bugs... For that is The Blastoise Way!
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'Thank you for that kopweb I was not aware of the “fat cat spat” and what you say does make sense particularly the early exit penalty, which is one of the reasons I am sticking with the variable rate at the moment.

I have been with OVO since at least 2010 with a year out using another company which went bust, I enjoy being an OVO customer just wish they would simplify the monthly bills, I do believe that they complicate them deliberately along with other suppliers, making them difficult to check, especially for an old PERSON like me.'

Blastoise186
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Here’s how I see it.

OVO is now offering a fixed rate deal, but it’s completely optional and completely down to your personal choice as to whether you actually want to take the offer up or not. I see no harm in that, especially when it’s NOT being done as a “you MUST take this fix deal wither you like it or not” thing.

If you don’t want it, then simply don’t sign up to it.

Securing energy by zapping security bugs... For that is The Blastoise Way!
kopweb
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I agree with you, @Blastoise186.  What OVO are offering makes sense for them as a business decision.  It’s up to us whether we sign up for it, or wait to see what happens in the wider market.  In the 6 years since I joined them, they have usually been quick to respond to market forces and to do so innovatively and more responsibly than some other suppliers.

I suspect swallowing SSE Hydro caused a good deal of corporate indigestion, so it is not surprising that this fix offer looks on the surface to be slightly risk-averse (for them).

Emmanuelle_OVO
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Hey @kopweb and @Geoff Dickson,

 

It’s an interesting debate, our fixed rate contact is significantly cheaper than the recently announced Ofgem Price Cap and cheaper than variable prices that are currently capped by the Government's Energy price Guarantee.

 

 

Given the energy crisis, some customers might feel more secure fixing into a plan as those who fixed in previously were protected from significant price increases. However, it is completely up to the customer as to whether they’d prefer to stay in their current variable plan. 

 

We’re returning to the market with a new Fixed Tariff!

 

We’re now offering a new Fixed Tariff which will be a One Year Fixed product and will be available to our existing customers only. The tariff will be priced at approximately £2,275 for the duration of the 12 month contract - based on a customer who’s an average consumption user, and pays by Direct Debit. This is cheaper that the Government's Energy Price Guarantee, which is £2500. Remember -This is based on an average user. If a customer leaves the tariff before the end of their term, exit fees will apply of £75 per fuel.

This Fixed Tariff will be available to Pay Monthly customers only. Unfortunately, at this time we won’t be able to offer this Fixed Tariff to our Pay As You Go (PayG) customers. This is something we’re currently working on and we hope to open up our Fixed Tariffs to PayG customers in the future.

 

Renewable Energy? Big Fan.
juliamc
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What does PayM stand for @Emmanuelle_OVO ?

Blastoise186
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Pay Monthly. :)

Securing energy by zapping security bugs... For that is The Blastoise Way!
Emmanuelle_OVO
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Sorry @juliamc for that jargon- I’ve updated it 😊

Renewable Energy? Big Fan.
juliamc
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So direct debit and pay on receipt of bill..

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So what is the Government’s Price Guarantee of £2,500.00 p.a. When I am paying £500.00/month, do I only pay this for 5 months. That is the way!  

Firedog
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So what is the Government’s Price Guarantee of £2,500.00 p.a. 

If you’re paying £500 a month, you’re not the average household. This is all clearly explained in countless places, but here are some figures for you to peruse:
  

  

The magic £2500 is outlined in red; the bottom picture shows the current situation, the top one what takes effect on Saturday. These are the average rates in Great Britain; they are higher in some parts of the country and lower in others as you can see on the pages these figures came from. Suppliers may charge less but not more than the published rates. 

Noel | I have no official status; I'm just a volunteer who comes here to help other customers. My gear: Aclara SGM 1416-B Electricity-only E7 meter; Chameleon IHD3-PPMID-AAA
G
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Thank you for that Firedog, still doesn’t make sense to me, it’s along the lines of a “Price Cap “ which also makes no sense when it isn’t a cap, it’s just more claptrap from the idiots in charge.  I am your average household but Ovo kindly pay 5% interest when you are in credit better than any bank or building society, so it makes sense to be in credit. 
Take care. Geoff

BPLightlog
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If you think about it @Geoff Dickson if it was a complete ‘cap’ everyone could just leave everything on all the time and not pay for what they use. I’m not sure they explain this very well but @Firedog shows where the figure comes from based on a particular kWh usage. 

Independent volunteer - Sitting in a Faraday cage, waiting for a signal

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