Price cap increases- To fix or not to fix?

Hey @Firedog, 

I‘d be a terrible lawyer so I know where you stand! 

I’ve stared at this all afternoon since our call, and I keep going down different pathways. With my training, I know most of the circumstances in which I would apply an exit fee, but looking at it from a customer perspective, as you said, it’s not clear. I’m going to take this away and get other perspectives on it. I’ll drop an update as soon as I have it 🙂

Language, phrases, and even individual words, can mean different things in legislation (law) than they do in general everyday usage.

That often causes confusion in things like the clauses in T&Cs. To a lawyer a particular word in a particular place means one thing, but if you are not a lawyer you may not see/know that and think that it means something else.

At the risk of getting long-

I'm trying to think of a good example. The best I can do at the monent is one that keeps cropping up now and again on benefits advice fora - bank charges.

Benefits legislation prohibits banks from making  ‘charges’ on accouts  that are solely serviced by benefits payments. ie. The only money going into the account is from benefits.

You often get someone who thinks that means banks shouldn't ‘charge’ any interest at all on an overdraft if your only income is benefits.

However, in banking law it's an Overdraft  Fee not an Overdraft Charge (never mind what word is used on your statement, legally it's a Fee).

‘Charge’ has a specific meaning in banking legislation - it's the taking of money from one account to pay a debit on a different account.

Ps.That's not as long as I thought it might get - probably because I'm not a lawyer qualifying every word/phrase used.

You just point out the key issue here. Let me illustrate the concerns in greater detail with the following example:

As a customer who signed up for the 1 Year Fixed Loyalty tariff in April, I received a confirmation email that included a statement indicating that the relevant terms and conditions apply to the tariff. However, the link provided in the email directed me to a webpage instead of an attached PDF document. At the time of signing, when I clicked on the link in April, the terms and conditions clearly stated that no exit fee would apply under condition A.

Recently, I clicked on the same link provided in the email to review the terms and conditions again, and I was surprised to find that the content had changed. The link now directs to a webpage with updated terms and conditions that include an exit fee under the same condition A, which were not present when I signed the contract.

The problem here is that the terms and conditions linked in the confirmation email are a "moving target." They can be updated or altered at any time by OVO without notice, making it impossible for customers to retain access to the exact terms and conditions that were in place when they agreed to the contract. This raises several concerns:

1. Lack of Evidence: Since the original terms and conditions were not provided as a PDF attachment or any other fixed document, customers have no way to verify or present evidence of the terms they agreed to at the time of signing. This puts customers at a significant disadvantage in the event of a dispute.

2. Potential for Disputes: If there is an argument between OVO and the customer regarding the applicability of an exit fee or any other terms, the customer has no way to prove that they agreed to a different set of terms. This could lead to a breakdown in trust and potentially legal disputes, as the customer may argue that the terms they agreed to at the time of signing should be honored.

3. Transparency and Trust: While it is understood that OVO may update its terms and conditions over time, applying these changes retroactively to existing contracts without providing a permanent and accessible record of the original terms undermines transparency and trust. Customers expect that the terms they agreed to at the time of signing will be honored throughout the duration of their contract.

To avoid such issues and to maintain trust with your customers, I respectfully suggest that OVO consider the following steps:

• Provide Fixed Documentation: Ensure that customers receive a PDF or similar fixed document of the terms and conditions at the time of signing, which they can keep for their records. This would serve as the definitive version of the contract terms.

• Maintain Archived Versions: If terms and conditions are to be hosted online, provide an archive or version history so that customers can always access the version of the terms that applied at the time they signed their contract.

• Clear Communication: Clearly communicate to customers that changes to terms and conditions will not affect existing contracts unless expressly agreed upon by both parties.

I believe taking these steps will not only prevent potential disputes but also reinforce customer trust in OVO Energy's commitment to fairness and transparency.

I think the problem with the misleading/ambiguous section I highlighted is simply one of formatting. The way it is currently, the unindented let-out clause (unless ...) applies to the closest unindented clause before it. It’s probably supposed to refer only to the phrase or possibly all three bulleted phrases immediately preceding it. We can’t tell. 
  

I once learned that indentations have meaning in legal texts, which is why, for example, the first line of every separate paragraph is indented. If it weren’t, a new paragraph beginning at the top of a page could be understood to be a continuation of the one at the bottom of the preceding one. This could lead to misinterpretation of ‘the preceding paragraph’ with potentially unintended consequences. 

At the moment I am on a variable tariff and am trying to work out what my new prices will be if a stay on the variable. I know it's going up 10% but do I need to also include the 5% VAT to get the overall total.

You probably should, just to be safe.

That said, the FIX deals OVO has on offer are pretty sweet right now - I’d strongly recommend you consider them.

@Blastoise186 thank you for your reply also do you now if standing charges are also going up?

They will do, yes.

You can see how prices across the country will change on 1 October in these tables: Get energy price cap standing charges and unit rates by region | Ofgem

The ones shown for your region, meter type and payment method may not match the ones OVO eventually charges exactly, but they won’t be far off. The figures in the tables include VAT.

Speculation time again

While Cornwall haven’t updated their price-cap forecast for some weeks, both BG and EDF have. BG expects a 5% rise on 1 April, while EDF think it will be nearer 6%. 

I just checked what OVO have on offer, and I was surprised to see that some of their fixed-price offerings include standing charges (SC) significantly lower than current ones. Today’s 1-year fixed plan, for example, shows for me 45.95p as opposed to 54.18p for Simpler energy. That is a 15% reduction, of real value to a low (~3 kWh/day) user like me.

Looking at the Extended Fixed plan (17-month, i.e. including all of next winter), it would cost me about 4% more annually (i.e. about £1.50 a month) than my current fixed plan, which expires in May. This beats the forecast cap increase from 1 April, and no-one is predicting that prices will fall significantly after that, or indeed at all in the foreseeable future. I’m sorely tempted to strike while the iron’s a lot hotter than my toes are at present, at the risk of having a red face if Ofgem make any real change to their SC calculation before June 2026.

Have a look at the latest offerings: Our prices | OVO Energy 

Looking at future predictions for gas and electric I would say that prices are going to remain stubbornly high and I've not seen anything from commentators that suggests that prices are suddenly going to drop. I would say that FP is going to be better but not by a lot which bugs me. 1. There is no real difference. 2. There is no real competition.

BTW: I did really well with Agile last year but day-ahead price all day average is at about the SVR so no domestic saving for me atm and car charging in the early hours is at about 77% SVR compared with about 48% SVR for last year so I'm not saving as much this year but sticking with it and hoping for a warm and windy March.

Haha. When asking ChatGPT about if there was a website that gave information on wholesale prices for the next 48 hours (but not very successfully as it turns out) it gave me a link to how the CAP could change over the next year from an EDF web page that has been around since May last year. I could do a whoop whoop and say I was substantially correct but I actually wish that wasn't the case.

https://www.edfenergy.com/gas-and-electricity/price-cap-predictions

Obviously the predictions come with a health warning regarding reliability but I would say that fixing looks likely to be the best option. And the longer the better. I'm not sure I've seen a year when the CAP wasn't expected to go down in the summer.

That was the page I was referring to when I wrote “While Cornwall haven’t updated their price-cap forecast for some weeks, both BG and EDF have.“  Perhaps it’s time I reposted the links:

Predictions & Insights into the Price Cap - Cornwall
Price Cap Predictions and Changes - British Gas
Price cap predictions and insights | EDF
 

I think the data window for Ofgem’s calculations will be closing soon, so I expect that Cornwall are waiting for that so as not to be waylaid by recent weeks’ volatility.

Ofgem settled on a wider regional spread than usual for 2025Q2. The increase for the typical household will be 6.4% (so EDF won that race), but varying around the country from 2% to 9%. 

So, I took the plunge and plumped for a unit rate higher than my current fix (23.73 > 21.40) but with a significantly lower SC (45.92 < 49.56), at an annual cost to me of  £13 - but fixed until July 2026. This Extended Fixed price is ~1.5% lower than the Q2 price cap.

The saga doesn’t end there. A week later, that quoted unit rate had dropped to 22.42 … Was this a trend, or should I grasp this bull by the horns while I’m in the 14-day cooling-off period? Well, chicken trumped bull and I didn’t. The following week, that rate had changed again and was now 22.27, with equally confusing changes to the SC. So this time I grabbed it  - yesterday, on day 13 of the no-exit-fee holiday. 

I felt really smug when I saw that today’s price is 22.92, with an SC of 46.92. I’m now stuck with it until August 2026, so I’ll be silently urging Ofgem to boost standing charges even more than the +£15 the new Warm Home Discount scheme will probably cost.

Moral: Keep a close eye on the Plans page: the fixed rates are changing once or twice each week: blink, and you could miss a cracker.

Just for fun, I tracked the Extended Fixed rates as they changed this year. I’m not sure, but I think the commercial people who dream this stuff up decide how many customers will be able to opt for a particular plan. That way, if their crystal ball failed them and they bought in advance at a higher price than they would have paid later, the potential loss is minimized. With any luck, and if they did their sums properly, the losses will be outweighed by the gains. Anyway, here are the various Extended Fixed rates since the start of the year:
  

  
I’m still hoping to avoid the 4-5p/day increase in the standing charge that the proposed expansion of the Warm Home Discount scheme could cost from 2025Q3. And, of course, any other increases Ofgem may dream up.