Price cap increases- To fix or not to fix?

Getting responses from general users might take you a while. I’ll summon some of the other Forum Volunteers as they might be around. Other than the fact we get access to extra knowledge behind the scenes at OVO, we’re just regular customers. Please bear with me - they might not respond immediately.

@BPLightlog @Firedog @Nukecad @Jeffus @Peter E @BeePee have you got a second?

I’ve also pinged a few users on the other side to see if they’re willing to stop by.

I'm fixed until late December (1-year Fixed Loyalty Plan) but am keeping an eye on things and may ‘tariff hop’ to a new 1-year fix before then, possibly before any October rise.

In the end various things have to be considered and whether you fix or not is always a bit of a gamble, you might win you might lose - but sometimes it's less of a risk than others, depending on what fixes are being offered - and that you have to weigh up for yourself in your own circumstances.

Just fixed for one year. I compared my original variable tariff with the one year fixed loyalty , the fixed loyalty actually came out £6 cheaper over the year (£1322 to £1316), This is mainly because the standing charge is slightly less, but the unit rates slightly more. Given that a10% increase is occurring in October a sensible choice.

I was however amused by some of the wording which suggested that the figures appearing in my sign-up e-mail may not be the same as the figures quoted when signing up! They do match.

I fixed back in May at rates which have so far saved me a bit over the SVT. The saving will get quite a bit bigger in October. I was a bit miffed to see that the 1-year Loyalty fix released last week is a bit cheaper, but the difference would amount to less than 10p a week, so I can’t be bothered to change.
  

You’re not referring to the passage that says “Your unit rates and standing charges might show differently on your statements,” are you? That’s always included to point out that rates on bills are shown ex VAT, with the VAT added lower down. Rates in quotes and confirmation emails and on TILs are always inclusive of VAT, but rates on the tariffs page are given ex VAT just to be awkward.  

Given that Q3 2024 and Q1 2025 are shown as increases by Cornwall Insight fixing is probably a good idea but there isn't much in it unlike before the surge in energy prices where there was an appreciable advantage in doing so.

My issue about fixing is that it’s a bet. You are betting that your guess on energy prices is going to be better than a company whose business is estimating future energy costs and set the price to come out in the profit side of the deal. By opting for a Fixed Term the company can buy further ahead on the Futures Market and get a better deal. Where it gets a bit muddy is that the company may take a gamble on a smaller margin or perhaps even a small loss to keep you on board and stop you going elsewhere. That improves the Fixed Terms odds.

Given the uncertainty in the energy market at the moment I would probably only fix for a year. One of the known factors is that at the end of this year Ukraine's gas transit contract with Gazprom finishes and they are likely to turn the remainder of gas (not LNG) flowing to Europe off. This is likely to unsettle the gas market, prices go up and those on Fixed Terms gleefully rub their hands together. On the other side gas storage is very high, just over 90%, for this winter, gas supply is also somewhat diversified now and if we have another mild winter gas prices could plummet Q2/Q3 2025. Hooray for the SVT.

Who wants to throw the dice?

Peter

Am I correct in thinking that you need to call or WhatsApp support for the switch, as the offer won't be visible in the app?

I’ve always likened fixing price to having insurance or not. 
In many cases you’re not obliged to have insurance but it gives you peace of mind, just in case. 

@BPLightlog That is a very good analogy and peace of mind is an important aspect of this. Being able to calculate the risk has its advantages though.

If you are already fixed then you will not be shown an option to change tariff on the app or the browser account portal until 53 days before your current fixed plan end - so the only way to ‘tariff hop’ to a new fix is to contact customer support.

Be aware that if, as an existing customer, you use the ‘Get a Quote’ page to sign up to a new tariff then you may find that you have actually done an account switch to a new account number.
You probably don’t want to do that, see here:

Hey all,

I know this will be a reasonably significant topic over the next few months, so thank you all for sharing your thoughts and insights so far.

Just an observation about fixing tariff at this time of year and following OVO's recommended DD's to attain a zero balance at your fix end.

Following that recommendation means that if you take a 1-year fix in autumn/winter then your account will almost always be in debit throughout the year.

ie. You start your new fix at zero balance, and because it's autumn/winter your ‘averaged out’ recommended DD won’t cover your monthly usage in those winter months.
So you immediately start to build up a debit - only catching up to zero again over the next summer as you approach plan end.

Of course if you fix in spring/summer than the opposite happens and you should build up a credit over summer that then covers your winter use and gradually reduces to zero..

I suppose it’s not really that important unless you don’t like your account always being in debit?
You could always ignore the ‘zero at fix end’ advice and (if you can afford to) pay more than the recommended DD to build up a credit balance.

Just to add a thought about how we send a consistent message to anyone asking the question of whether to fix or not. Can we have a simple flow chart that we direct customers to that gives the options. @BPLightlog made the very good point that for some people it isn’t about the small gain or loss you might make on either option it’s about not having to be concerned about the changes that occur every quarter. That should be the first box. Do you want the security of having a fixed rate? There can be notes further down to say that there is unlikely to be a significant difference between the SVT and Fixed Energy Deals for the foreseeable future [[ within this discussion - it is unlikely that energy costs will decrease significantly over the next decade for a number of long term reasons]]

Before delving further down the flow chart it would be useful to know if this is the approach that the company would like to present to their customers?

Peter

This doesn’t sound right. For a start, there’s no indication that ‘you’ have a zero balance at the start of the fix.

Second, you undertake when paying by DD to keep your account always in credit, so it’s not certain that the fix would be allowed to go ahead without an initial injection of cash. This comes as a surprise to some: when setting up a new DD, one month’s payment is taken immediately, with subsequent ones being taken on the date appointed. This will of course depend on how far ahead the appointed date is.

However you look at it, the scenario you describe is contrary to the account terms and would raise eyebrows.

It’s what happens in practice though, no eyebrow raising involved.

Despite the undertaking to keep your account in credit it happens simply as a consequence of the OVO aim of having you achieve a zero balance at a fixed plan end.
It seems that OVO are not bothered about a temporary debit balance if it’s a fixed plan, see below for why not

(I think we may have already discussed the various implications of that a while ago in the PZH forum?)

Think it through again:
If you are currently on a fixed plan and get it to zero balance at the plan end as intended by OVO then you will start a new fix with a zero balance.
If it's winter and your new plan DD is set at your projected anual cost /12 then your initial DDs will not be sufficient to cover your winter usage, and so a debit will build up initially and be paid off again by plan end.

Fixing when you already have a debit balance is not an issue either.*
That's because the existing debit balance gets factored in and collected over the fixed period to give zero at plan end.
Think of it as a 12-month debit repayment plan if you like, one that's added to your recommended DDs for your usage, and which increases your minimum DDs accordingly.

Similarly fixing when you have a credit balance.
The credit balance gets factored in and lower recommended DDs given to reduce it to zero at plan end.
Unless you pay more than the recommended minimum DD.

*PS. I fixed tariff last December despite having a debit balance of -£287 at the time, it was not a problem - and as you can see from this screenshot I am on target to have it paid off and achieve  zero balance by my plan end date this December.

However I think I’m going to hop to a new 12-month fix before then, I may even do it later today or tomorrow. If I do hop then I’ll let the forum know how that goes.

I decided not to hang about, and after a few last minute checks went for it.

I have now sucessfully done a 'tariff hop'* and switched to the 1 Year Fixed Loyalty 23/08/2024, my new plan/tariff starts at midnight tonight.

It was easily done over the phone, although it did take about 10 mins on hold to get to a person.
I'm on the priority services register, so usually get straight through and don’t have to wait at all.
However they are busy following the bank holiday, and with lots of people fixing and switching following the energy price cap announcement.

*It’s known as a ‘tariff hop’ because I have switched plans early, 4-months before my plan end, but as I'm switching from one Fixed Loyalty plan to another then there are no exit fees.

Although the new tariff doesn’t start until midnight things are already changing on my account online, including the recommended DD which has dropped from £134 to £112.

The new DD calculator graph shows very nicely what I have been saying above about fixing in winter.
There is about an -£80 outstanding balance today, and you can see here how at the recommended DD of £112 the debit increases during the colder winter months before coming back to zero at the plan end.

I think their notion of ‘healthy’ is very different from mine, or indeed from the spirit of the core terms.

 As I see it by ‘healthy’ they just mean not in (too much) debit at plan end, and what happens between now and then they are not too bothered about as long as it comes out ‘reasonable’ at plan end.

Personally I believe that the core terms statement is there more for legal reasons in the case of any problems, rather than meant as strict guidance.
T&Cs often contain ‘just in case things should get legal’ clauses and statements like that one.

thanks for everyones replies so far, i appreciate it

In looking for any risks relating to the ongoing war in Ukraine and the stopping of gas transit across the country at the end of this year (it appears that Europe has already come to terms with this happening) and I stumbled across this report from Cornwall Insight on their long term view of the electricity price trend up to 2030 which provides some more background on whether you Fix or stay with the Cap. It obviously doesn’t take into account a harsh winter or further developments in Eastern Europe or other short term issues.

I think the main takeaway is that prices are dropping slowly year -on-year but they are not going back to pre-2020 levels. Personally I don’t see much of a difference between a Fix and the Cap but at least a Fix gives certainty to your payments.

https://www.cornwall-insight.com/press-and-media/press-release/drop-in-power-price-predictions-up-to-2030/

Thanks for the reminder. I successfully switched to the August fixed tariff without incurring a termination fee by contacting customer support. However, the process wasn't straightforward. Initially, the representative told me that a termination fee would apply. I pointed out that when I joined in April, I received an email with terms and conditions stating that I could switch to another OVO fixed tariff without being charged a termination fee.

After a few minutes of checking, the representative confirmed that I could indeed switch without a termination fee, with the new plan taking effect tomorrow. I then received a new email titled "Your new fixed-rate plan will start soon." However, when I reviewed the terms and conditions in that email, I noticed that the clause about switching without a termination fee was no longer there. Instead, it now states, "If you joined OVO 1 Year Fixed on or after 19 August 2024." The terms and conditions seem to be dynamically updated, as even the link in the April email now points to the current version.

I hopped tariff yesterday from an old Fixed Loyalty to a new one and can confirm that the exit fee doesn’t apply in those circumstances.

However that is not automatic. the exit fees are still shown to the support agent onscreen and the support agent has to manually waive the exit fees.
My support person knew to do that but it sounds like yours didn't know about it until they checked.

The T&Cs for the 1- Year Fixed loyalty plans do change from time to time.
However in this case it’s just a change of wording, and a reduction in exit fees for some who switch to other suppliers.
It still makes it clear that the exit fee applies “If you change your supplier” (ie. they don’t apply if you switch to another OVO plan).
The reason for there being 2 dates showing there for the moment with identical terms (6.1 & 6.2) is because previously the exit fee was £75. That has now changed and it’s now £50 whenever you started your plan.
The one for before 19th Aug will have been left in place for now because people may still have that £75 showing elsewhere on other paperwork, emails, etc. (I did myself). But that £75 is now overriden by the latest T&Cs £50 exit fee, whatever it may say elsewhere.
https://www.ovoenergy.com/1-year-fixed-loyalty-terms/v2

Nukecad wrote:

The T&Cs for the 1- Year Fixed loyalty plans do change from time to time.
However in this case it’s just a change of wording, and a reduction in exit fees for some who switch to other suppliers.
It still makes it clear that the exit fee applies “If you change your supplier” (ie. they don’t apply if you switch to another OVO plan).

 

If you compare the current Terms & Conditions with the version I captured three months ago above (which I verified was still available just a few days ago), you'll see that it’s not just a change in wording. The highlighted sentence, “If you change to another OVO fixed tariff, you will not be charged a termination fee,” has been completely removed. In my opinion, the previous version made it much clearer that switching to another OVO fixed tariff would be free of charge. Additionally, since the linked T&C keeps changing while still being labeled as version 2, why not update it to versions 3, 4, etc., so that old emails can accurately refer to the original version?

I agree that this fiddling with the terms is confusing, and very probably illegal. My latest confirmation included a paragraph reading “For the 1 Year Fixed Loyalty tariff, the following terms and conditions also apply.”  There were no following terms and conditions, only a note about the cooling-off period with a remark that leaving after cooling off would trigger an exit fee of £75 if I changed supplier.

I didn’t have the foresight like @samsonluk did to take a hard copy of the T&C, but seeing that the v2 edition has now changed means that OVO have unilaterally altered the contract between us with no notice. They may have decided that the newer terms being apparently more favourable to the customer absolves them of any blame for doing this. It’s not even certain that the revised terms are more favourable, though, since they also include §10.4 of the core terms which are delightfully ambiguous on the subject. It’s also questionable what the amount of any exit fee would be: the confirmation email says £75, the linked T&C page now says £50, while my Plan says £75.

I wonder what the Ombudsman would say were a dispute about exit fees in these circumstances to land on his desk. 

Perhaps one of the mods could extract a comment from OVO’s commercial and/or legal people.

Hey @Firedog, 

I've been looking at this, and from my understanding, under the T&Cs of the 1 year fixed loyalty plan, it states - 8.1 Changes to these terms and conditions – we may change these terms and conditions at any time in line with our Core Terms.

The core terms state, 10.4 - On some energy plans, you may have to pay an exit fee if you cancel your energy plan before the fixed term expires. We'll always let you know if an exit fee applies, and these will be detailed in the terms for the relevant energy plan or in your plan confirmation letter.

So, from my understanding, they're both linked, as the plan terms state that we may make changes to the plan terms only if they're in line with our core terms, which they are. 

If you still want me to get a legal response, I can flag this and see what I can do for you. 

I hope this helps 😊

Thanks, Chris.

Of course there’s legal wriggle-room. That’s why I’m not a lawyer!  

However, I’m sure you’ll agree that this is either wrong or ambiguous:

[ETA: refer to Core Terms §10.4]  

“You won’t have to pay an exit fee if:

(unless you’ve already entered into a contract with us for a new fixed‑term energy plan);”

To me that ‘unless’ clause means ‘you will have to pay an exit fee if you’ve already entered into a contract with us for a new fixed‑term energy plan.’

How do you read it?