Price cap increases- To fix or not to fix?

I don’t think you can expect recommendations. The future is so very uncertain, not just because of what’s going on in the Middle East. You’re seeing better rates today because an unprecedented government intervention required suppliers to cut them, even ‘fixed’ ones. That means we can no longer regard fixed-rate tariffs as having fixed rates! Look, too, at the standing charges. In my region, the SC for a 1- or 2-year fix is 10p a day higher than the current variable rate. Will the government do something to bring them down? If they did, would that also apply to ‘fixed’ plans again? Of course, nobody knows, so we all have to make our own choices. Some of us will do better out of them than others, and your choice could well turn out to be better than mine.  

The best I can say is that if my fixed plan was ending this month then personally I would go to Standard Variable for now and keep a close eye on the Cornwall Insight forcast and what fixed rates are being offered at anytime.

Then depending on how I think prices may go I’d make a decision early in June wheteher to fix again or stay on SV, and again 3-months later, and …….

Remembering also that if you go to pay-on-demand rather than Direct Debit the next six months will be lighter use summer months. The on-demand SV tariff is slightly higher that the DD one though so you would have to weigh it up for your own usage numbers during the summer months.*

(Luckily for me my current fix doesn’t end until 27th August which gives me a bit more time to watch what is going to happen, and at the moment with the newly reduced rates my cost for ussage and SC’s is still slightly less than a new Standard Variable DD would be, and much less than the currently offered new fixes).

*BTW. The cheapest current tariff? You probably didn’t see it if you were looking at the fixes.
I’m not at all suggesting that you go this way but take a look at PAYG and compare it to the Standard Variable pay-on-demand/DD rates.

Hey ​@Goku, 

As Firedog and Nukecad pointed out, there’s a lot of uncertainty right now, and having the option to lock in your unit rates can really help you avoid any sudden price hikes, especially if you’re riding the waves on nimbus on a variable plan. 

Personally, I find that being on a fixed plan is much more comforting! It gives me peace of mind knowing exactly what my unit rate is, and I can easily keep track of my bills by managing how much energy I use. It’s all about finding what works for you!

Should I switch to Octopus as there is going to be an increase again in July?

What are

other people thoughts on this

I currently pay on receipt of my bill 

All energy companies are likely to increase prices from July 2026 as a result of the increase in the energy cap. It is worth looking around at both variable rates and fixed rates to see where the best deal is. Like you I pay my energy on receipt of bill but it is likely the best deals will only be by Direct Debit. This method of payment allows the electricity companies to build up your funds over the lower use summer months and hence often a slightly better deal is available.

As far as I can see, the only advantage for anyone who pays on receipt of bill is that Octopus offer something they call a “Variable Direct Debit”. This means that, each month, you pay for exactly the amount shown on your bill, but you do so by Direct Debit and so benefit from the lower rates that Direct Debit payments give you. I have not investigated this myself, but I suspect that we have those who know on this forum, but you may also be able to take advantage of tariffs that are only available to customers who pay via Direct Debit.

Morning ​@Katy65 and welcome to the OVO Forum Community.

I can see you’ve had some great answers here already and, as ​@DavidWSR suggests, the price cap increase is UK Industry-wide, rather than just OVO increasing their prices.

It’s a good time to assess your options, especially if you pay in receipt of a bill, as this will most likely mean you’re on the Simpler (variable) tariff, which has no exit fees. If you’re shopping around, I recommend getting quotes from energy suppliers directly, rather than using a comparison site. Make sure that you enter your annual usage figures as, without these, you’ll be quoted a Direct Debit amount which may be completely different to what you’ll end up paying reality. You can check your usage figures (future annual consumption) via the ‘Plan’ of your online account. 

Here’s a screenshot of my online account, with the annual usage highlighted in red:

If you enter that figure from your account when getting a quote, then the prices shown will be based upon your own usage. This’ll only work if you have smart meters that are sending regular reads, or if you’ve got traditional meters, and have been sending regular readings yourself.

Make sure to check our rates as well - hopefully we’ll be offering contracts at a good price that’ll keep you as a customer. You can view your renewal options online or via the app. We’ve got a guide for this too:

Let us know how you get on, and give us a shout if you have any other questions - we’re always happy to help 😊.

Old bone of contention here: the Future Annual Consumption figures aren’t shown anywhere in the app that I can see. Four years ago, this suggestion was made: 

Link to URL 

I have also not been able to fin the Future Annual Consumption figures on the app. It seems rather strange that something like this has been omitted. It is useful for being able to easily check the difference in costs for different tariffs and also to be able to supply these figures should you want an estimate of costs from another company.

Right you are ​@Firedog. I agree that FAC should be shown on the app, and I’ll pass this onto our Product team now.

​@Firedog I’ve sent the Ideas thread you’ve linked to the Product team as well.

Morning, ​@Ben_OVO 👋 and thanks! 

Quick question regarding the Price Cap (As set by OFCOM).
OVO state that the price rises are ‘Industry Wide’, which is fair enough, but, my question is, when OFCOM set the price caps, do energy companies HAVE to increase their unit prices and standing charges, or are they just doing it to make the most money from customers?

I mean, okay, OFCOM have allowed energy companies to raise their prices in July, but do they all HAVE to.
For instance, could OVO KEEP their current prices as they are now, to reward existing customers and attract new ones by having the cheapest fuel prices?

If so, it just seems like pure greed for every energy supplier to raise their prices, just because they can!

  OFCOM do communications - TV, radio, telephone and broadband, for example. The energy market regulator is Ofgem: GEM is ‘gas and electricity markets’.  
  

Ofgem don’t just set the price-cap, they determine pretty much just how much ‘profit’ the energy suppliers can make from the majority of their customers - those on Standard Variable Tariffs, the ones governed by the price cap. Before any interest or taxes have been paid, a supplier is allowed £43 per customer per year over and above costs. That doesn’t strike me as greedy.

Sorry, yes, OFGEM.

It might not seem ‘greedy’ to those who can comfortably afford it, but even a small rise in the standing charges and unit rates has a big effect on the monthly bills for those on low income, or unemployed for whatever reasons.

And, like I mentioned, Energy Companies make more money the more customers they supply and have signed up to them. Cheaper rates makes them more attractive and means more people will switch.

In addition Cornwall Insight are in the game of forecasting future CAPs here:

https://www.cornwall-insight.com/press-releases/cornwall-insight-release-final-july-price-cap-forecast-2/

Ofgem look a prices on the Futures market to determine what the level of the CAP should be to give the suppliers a readonable working margin. Suppliers can then play around with a combination of the Unit Rates and the Standing Charge to make themselves look attractive to different sections of the community. But, in total, their prices must not exceed the CAP for the user who is defined as average. Being careful not to use the term average user which might draw the wrath of ​@Firedog who would rightfully tick me off for saying no customer is average. It's too hot for being ticked off.

Suppliers can offer prices below the CAP. Bulb did that and went bust because they didn't buy enough contracts for their customers on the Futures market so when the prices went up in the post Covid energy crisis they couldn't afford to buy the energy. Tomato did that for EV users more recently and went bust possibly because they didn't ask enough to run an effective administration process and Ofgem shut them down when they failed their customers. You're damned (by comment) if you run at the CAP or dammed (by collapse) if you undercut it by too much.

Peter 

Ofgem don’t use the term ‘average’ about household consumption for a good reason. Almost every household uses some energy, but a few very high users push the average up to unhelpful levels. They use the median instead - the level that 50% of households use less than. This they call ‘typical’ consumption. Their thinking is clearly laid out in §2.9 and 2.10 here: Review of typical domestic consumption values: decision

I don’t do wrath, but clarification is always good, regardless of the weather 😉

Energy companies only obligation as regards the Ofgem “Price cap” is that they are told, for each of the regions, the MAXIMUM that they can charge for unit rates for each fuel and the MAXIMUM that they can charge for standing charges for each fuel. Those of us who have been OVO customers for some time may remember, some years back, when OVO did not raise their standing charges for a considerable length of time (I think it was, at least, 6 months). I do have the data on one of my machines, but could not put my mouse on it immediately. However, the costs of keeping us all supplied do go up - by this I mean the running costs of companies. Increasing wages (and there is nothing wrong with doing this), increased National Insurance costs for employers (I can wax lyrical about this for hours), increased costs of basic things like meters and In Home Devices and the cost of getting them to where they need to be, network charges that allow energy companies to distribute the energy they buy, the cost of the government mandated Warm Home Discount, etc. all need to be paid for. 

Companies have to strike a balance between charges and viability. When companies fail, the knock on effects are felt by us all.