Price cap increases- To fix or not to fix?

Am usually fairly confident about using the Cornwall Insight figures, but very wary of risk right now. The probability of further wholesale price rises has increased IMHO since the last Cornwall Insight press release 

Wholesale prices not unsurprisingly on the up today.

But probably won't go bananas like it did in 2022 when Europe started to cut itself off from Russian gas supplies and Europe is now oriented towards the US in a big way.

On the other hand wholesale day-ahead electricity prices are very strongly negative tomorrow (paying to take energy off the grid) and my guess is that this is because of large scale dumping of demand by utilities which they bought on the futures market quite a while ago but I would be interested to hear views on what the actual reason is though.

High wind drove the day ahead prices lower, double the seasonal average. But these odd days only really help octopus tracker and Agile customers at the moment. As you say energy suppliers buy most of their energy in advance and trade if they  need a bit more or less. Also the CFD contract for difference process mean wind turbines get paid a fixed price at the end of the day anyway, a netting out payment is added to our bills to cover when the price is higher or lower than the fixed price. All the energy suppliers that tried to game the market by not buying ahead when bust. We all paid for this with a levy on our bills. OVO Anytime can make use of low 30min slots in terms of pricing which is good.

Like you, I also think it is unlikely we see the huge spike we saw coming out of covid and the start of the Ukraine conflict, none the less forward electricity prices have risen since the Cornwall Insight figures from the low they were at

This shows the forward electricity prices for next winter and summer and how it has changed over time.

It is just I think the expectation that prices will fall feels a bit out of date to me.

Be interesting to watch the fixed price offers from suppliers over the next month and how world events unfold.

Hi @Jeffus and thank you for coming back.

This is the difference between two different markets. The Futures Market which will fluctuate slightly over the year/years but at least once source had suggested no real drop back to pre-2021 prices for the next 10 years at least. The day-ahead wholesale market will have its ups and downs but if you track this year’s average whole-day rate against 2023 there is a scarily close relationship that has been operating over the past six months almost down to the timing and the depth of the price plunges which is just beginning to suggest that these are not as random or as ephemeral as might be thought. Time will tell on that.

As a summary, if you are a customer who likes price stability then Fixed-rate Prices or even the SVT is definitely for you. If you can flex your usage out of the peak slot then Power Move is a good, zero risk, add on to have. There is plenty of good guidance from the forum volunteers and other users on here on how to meet the targets

My question is: Will more utilities offer a more wholesale/flexible pricing option like **Power Move (and more) to customers who want more than price stability.

Peter

** Even Power Move is a type of flexible pricing as the total bill for the month depends on when you use your power which is the same type of result as wholesale day-ahead but more predictable and no risk.

Power Move is OK but is very simplistic as the power move period is fixed every day and there is no downside. Also as you say it doesn't take any account of wholesale prices or pay high usage users any more which would make the most difference longer term. It isn't bad as the high use of fossil fuels and high prices is usually  around the same time every day. But in the future this may change. Even now some local areas (sub stations) have peak usage overnight due to a concentration of EVs. So a move to zonal and nodal (your local substation) load balancing and pricing is on the cards for the future. Without things like this the investment in infrastructure will be eye watering. A level of central control like Intelligent Octopus, OVO Anytime is likely to become more widespread which will also help. This functionality is already mandatory in new EV charges to prepare for the future. This central control may be by supplier, regional or national with some clever tech managing load in many of our homes. The challenge with anything like PowerMove as it scales up is that you can end up with a large peak load in some substations just after the powermove period.

There are a few things like Power Move offered by other suppliers and of course the National Grid Demand Flexibility scheme which is much more targeted.

If this is a subject you are interested in then have a read of this and input to the consultation.

https://www.ofgem.gov.uk/publications/ofgem-launches-discussion-future-price-cap

We may not be many years away from everyone being on some sort of peak/off peak tarrif as a default option.

I certainly agree with the introduction of flexible tariffs but I also have concerns about people’s abilities to manage their demand on such a tariff and I think this is where a good support team from Ovo would help enormously and I see the need for able volunteers becoming more important.

By fixing, you can lock in your current standing charge rate and potentially save money in the long run, especially if Ofgem's changes to standing charges don't happen before your fixed term ends.

Well l have fixed it has got to be cheaper then last time round. just got an email to say l didn't hit my target for this month. but sometimes l find it harder to use less. but if you eat at eight like we do. so you are using the oven and hob. why would eat after nine a bit late. we got use to that time any way. l do use essentials like appliances washing machine. just done a bit of ironing now so that uses less.

For anyone following this, I noticed yesterday a new 1 Year Fixed Loyalty plan, dated 09/05/2024. It represents a significant saving for me over the current SVT and even more over the year using Cornwall’s predictions. It’s a 5.5% saving on the unit rate and 7.1% on the standing charge for me compared with my current SVT, and it’s about 7.5% cheaper overall than what Cornwall is predicting. They would have to have got it very wrong if rates were to change so much as to make it worthwhile for me to switch back at a cost of £75.   

This plan is a lot more generous than the 1 Year Fixed plan dated 18/04/2024, so I’ll be keeping a close eye on it for a few days.

[ETA] … bearing in mind that the Q3 price cap will be announced in a couple of weeks’ time.  

Just checked my mother’s gas and electricity tariffs (she is with British Gas). She fixed about 9 months ago so fixed at a high rate. BG allow you to swap to another fixed tariff without incurring the exit fee. So no brainer really. Fix again and if it goes down fix yet again, if it goes up she is quid's in.

Maybe OVO should consider something similar? 

Maybe they should consider that. if it goes up we can change our mind and if it comes down do the same without paying an exit fee. that sounds like a good idea.

@Firedog the variation across the country is amazing. For me a fixed deal gives a penny less on peak rate which we rarely use (solar and batteries), 0.3p cheaper overnight, and 4.4p more per day which more than offsets the savings. For gas it's 0.3p per unit and 2.7p per day CHEAPER than variable. Where is the sense in making gas cheaper when the world needs us to get off it. 

Am I correct that OVO is already offering this? There are no exit fees if you switch to another upcoming OVO fixed tariff, right?

Found this in the help section

If you're on a fixed plan

You must be in your ‘renewal window’ (which starts 53 days before the end of your contract) to change, or you may incur exit fees. Once renewed, the new plan will start when your current one ends.

Change from fixed to fixed:

• Change from Better Energy to 2 Year Fixed Energy anytime – no exit fees.

• Change from 2 Year Fixed Energy to Better Energy – £30 exit fee on each fuel if you change before the renewal window.

Change from fixed to variable:

• Change from Better Energy to Simpler Energy – £30 exit fee on each fuel if you change before the renewal window.

• Change from 2 Year Fixed to Simpler Energy – £30 exit fee on each fuel if you change before the renewal window.

So only if you are on certain tariffs.

I’m just looking into this for myself, and did an online quote.
https://products.ovoenergy.com/journey/switch/get-quote

I'm currently on a "1 Year Fixed Loyalty" started on 21 Dec 2023.
(I believe that I've also seen it referred to as '1 Year Fixed Loyalty 14/12/2023'?)

Having the same name plan with different dates and different rates does raise interesting questions.

Can you switch/renew to a newer "1 Year Fixed Loyalty" plan part way through your existing "1 Year Fixed Loyalty" plan? ie. Effectively extending your end date at the new tariff rates.

Firstly the question of exit fees:
The 1 Year Fixed Loyalty Terms & Conditions (from the same quote), #6 says that no exit fee would apply if you “change to another OVO fixed tariff”:

The one question that I have there is would switching from one ‘Fixed Loyalty’ plan to a later version of the same named plan still count as "another OVO fixed tariff"?
I believe that it would because although having the same ‘basic’ name the tariffs are indeed different and the plans have different dates in their ‘full’ names when you include the date*

So if it works out cheaper for you and you decide to do it then how would you go about that as they both have the same plan name?
It looks to be as simple as getting the online quote and then simply clicking the "Choose plan" button on the quote.

*That button was shown to me, suggesting that I can indeed switch/renew at the new rates.

I haven't done that yet as I still want to do some number crunching, if I am going to do it then I'll probably do it on the same day as my current billing period ends - Or should that be the day after when the new billing period starts?

I found that, too, but it’s sadly out of date. I don’t thing OVO offer a plan called Better Energy now. The exit fee is given on the Tariff Information Label and - I think - everywhere else that plan rates are quoted, e.g. 
Energy Renewal (ovoenergy.com) 
Our prices | OVO Energy 
Get an energy quote (ovoenergy.com).

It’s currently £75 per fuel for the one-year fixed rates and £95 for two-year fixed rates that I can see.

The principle still applies as far as I’m aware, though: simply put, unless you’re within 7 weeks of the end of the contract, any plan downgrade (e.g. 2-year fixed > 1-year fixed, fixed > variable) triggers an exit fee, but upgrades don’t.
  

@ChristopherS_OVO et al: are there plans afoot to review and update help articles like this? 
Changing to another OVO plan | OVO Energy 

Which still leaves the question about changing mid-term from a 1 Year Fixed to a newer 1 Year Fixed?

Although the current Fixed Loyalty T&Cs that I screenshotted above do suggest that no exit fee applies as long as you are already on a Fixed Loyalty plan and are ‘renewing’ to any other OVO fixed plan is that correct, and is it also correct for all current fixed plans?

@ChristopherS_OVO any chance that you could get that clarified as well?
The current guidance seems vague - and contradictory in places.

My guess would be ‘No’. If this were possible without invoking an exit fee, there would be no point in calling it ‘fixed’ and there would be no gamble involved. OVO have ostensibly already bought the fuel you intended to use when you fixed at the forward price prevailing then. I don’t suppose they can sell it back at the same price, which has presumably fallen in the interim. The exit fee is to indemnify them against that potential loss.

Your sums might show that fixing again at the new lower rate could save you more than the amount of the exit fee. Then again, they might not. 

Yes. I had already considered those points and they are of course valid.

Always remembering that you are extending your fixed term too, and they are now ostensibly buying fuel at a forward price for that extended term and setting new fixed tariffs accordingly..
And for that new term anyone new fixing now would be using exactly the same fuel as you, coming from the same sources at the same cost.
(It’s not as if it’s already been supplied to OVO and is sat in a big pile somewhere).

However there does not (Currently) seem to be anything in the published T&C’s to prevent you from doing it.

That may be why it’s difficult to find it stated clearly anywhere one way or the other, the hope/expectation that people won’t notice the ‘loophole’ and so will just stick with their current full term?

In effect it may be a small gamble on OVOs part that fixers won’t notice that they might still fix again early, as long as they stay with OVO - a small part of the bigger ‘game’.

Personally I see the exit fees more as a disincentive to jumping ship to a different supplier offering a slightly lower fixed rate.

Hey @Firedog 

Thanks for flagging this, we’ve raised this now to be updated. 

Thanks again for flagging this.

I have been looking some more into this early Plan switching and Exit Fees question.

Two days ago I posted this:

Nukecad wrote:

 

However - I’ve checked the email that I got when fixing to my 1-year Fixed Loyalty tariff back in December.
I clicked the link in that email to the T&Cs and was taken to a version with this:

Even though they are both headed as “1 Year Fixed Loyalty Terms” you can see that they are clearly different.

The respective webpages are:
https://www.ovoenergy.com/1-year-fixed-loyalty-terms
https://www.ovoenergy.com/1-year-fixed-loyalty-terms/v2

The earlier version (the one that I signed up to) does not allow switching to another OVO fixed tariff plan without the Exit Fee(s) becoming payable.
The newer version clearly does allow it, and has had an extra line added to say so. (The wording “your supplier or plan” has also been altered accordingly.

The moral being to always check exactly what the terms that you signed up to are.
Generally you are bound by the terms & conditions in force when you sign.

(Whether in this case OVO would strictly enforce that or not is another question. I suspect that they would otherwise why leave the older version in place?)

My original email link to v2 as shown below and that's why I expect they are offering without exit fees.

Hey @Nukecad,

“Tariff hopping” all depends on the tariff that you are on and the one you’re moving to, as both will have slightly different terms and conditions. For example, in the screenshots you sent us, the fees are £75 per fuel, but this would be mainly for those on fixed tariffs who are thinking of switching suppliers. If you’re currently on a one-year fixed and move to another one-year fixed, the fee could be £30 per fuel or £0 depending on factors such as the length left in the contract, etc. Our Support Team has a tool to determine whether exit fees apply. 

@Abby_OVO has submitted the request to get the “Changing to another OVO plan” page updated with more up-to-date plan examples which will help making things easier to read. 

You’re right that, in some instances, we wouldn’t enforce exit fees. I’d like to think common sense would prevail in these scenarios. We’ve all fallen victim to the “available to new customers only” marketing tactic, so why wouldn’t we try to help out loyal customers? 

I hope this helps 🙂

samsonluk wrote:

samsonluk wrote:

Am I correct that OVO is already offering this? There are no exit fees if you switch to another upcoming OVO fixed tariff, right?

My original email link to v2 as shown below and that's why I expect they are offering without exit fees.

 

Yep

Still offering zero exit fees for me on a switch to another loyalty tariff

It has been there for ages for me.

Am already on a fixed loyalty tariff with no exit fees if  switch to a new fixed tarrif with ovo.

It is a shame the plan page my ovo account only contains a cut down version of the exit fees and doesn't detail it. I would say that is a bug personally. It would be better if the plan page linked to the actual terms and conditions for the specific plan.

https://www.ovoenergy.com/1-year-fixed-loyalty-terms/v2

It is a bit of a mess unfortunately