Price rises


 My fixed rate is ending in June and ive opted in for another two year fixed plan with very scary increases. I hope I've done the right thing as the variable rate was much cheaper


10 replies

Userlevel 7
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Hi @jules ,

Good question this one. :)

Ultimately, the decision of what to go for rests with you but I personally feel it’s still better to lock in a fixed rate deal if you can. This will protect you from further price rises for the entire term and it’s highly likely that the price capped variable rates could shoot past your fixed rate deal at any point before it runs out.

As for me? Well, my current two year deal with OVO runs out in October 2023 and it's currently basically the cheapest deal anywhere in the UK right now because I locked it in one day before the prices went up last year.

You did well to do that. 

The two year fixed term for me I've signed up for now is has more than doubled what I was paying and a £60 opt out fee.

I've got 14 days to change my mind

I guess if it should come down within the two years I could pay the £60 and change but its looking unlikely at the moment.

I'm just miffed I've got to pay so much now. We are trying  to find all ways to cut down on our usage. 

Userlevel 7

Welcome back to the OVO online community, @jules.

 

A really important question this one. We appreciate that making a renewal decision can be difficult at the moment, just in case you hadn’t found it some of our community members have been discussing their options on this thread.

 

 

We know that the increasing energy costs are concerning. We’ve got more information on the Variable Price cap and some links to additional support here too.

 

I hope this information helps.

Userlevel 7
Badge +1

If you want piece of mind then a fixed rate deal is always worth considering. 

@Blastoise186 was fortunate in fixing before rates went up significantly. Personally i think the decision is not so easy now unless you want piece of mind. It depends on how much risk you can take.

I recently went from an ovo fixed rate to the variable rate when my contract came to an end. In fact in my case i am now being offered fixed rates lower than the fixed rates i was offered just a few weeks ago so i am glad i didn't fix recently. 

I may still fix, am just keeping an eye on the wholesale market, what ofgem are up to, and any government noise about possible interventions. I can afford to take the risk. 

Cornwall Insights have been pretty good at estimating what may happen next. They are currently forecasting bills of circa £2595 so a circa £600 pound increase in October for a typical user 2900 units electricity, 12000 units of gas vs £1971 now.

But there are so many uncertainties.... 

The October price cap is due to be announced in early August. Estimates will get better the closer we get to this date as the cap is based on wholesale prices over the 6 months to August. 

Userlevel 7
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There are also strong signals that Ofgem intends to revamp how the price cap works, and one of the proposed changes is to shorten each period from six months to three and make it so that prices can change four times a year rather than two times a year.

I’m in support of this, since it does at least help to reflect the real costs of supply more quickly when wholesale prices rocket, but also allows you to benefit more quickly when they plummet.

But as I’ve said before (and as has Ofgem), the Ofgem Default Tariff Cap is not intended to be a subsidy of any kind, nor is it meant to give you any kind of discount off of your energy bills. It’s designed and intended to play fair for both supplier and customer alike, but the events of the last year forced a lot of suppliers to lose money when their variable rate tariffs became loss making. I wouldn’t be surprised if future price caps - at least for the time being - are set higher to allow suppliers to recover their losses over the long term.

Userlevel 5
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Everybody is wondering about this. What is your rate? Around 35p/kWh? 

Look into when is the latest you can quit without penalty, usually that is 28 days into the new tariff (or 28 days after agreeing to it?). Make a decision then. The energy markets are very volatile, and this week it is looking as if things are going back to normal. But next week could be crazy again. 

Also look at the early termination fee. It has gone up recently, and that should be the maximum amount you are out of pocket if you get the call wrong. 

If I decide to opt into a two year fixed plan the opt out fee is £60 does this still apply if I stay with ovo but decide to go on another plan in the future if it works out cheaper than the one I have 

Userlevel 7
Badge +3

Yes it does, but there may be circumstances where you can get it waived.

The most common ones are of course if you’re still in the 14 day cooling off period and when you’re in the 45 day renewal window at the end of the team. I think OVO sometimes waives the fee if you’re upgrading from a one year deal to a two year deal though I’d have to ask @Jess_OVO to make sure.

Thankyou 

Userlevel 7

 

I think OVO sometimes waives the fee if you’re upgrading from a one year deal to a two year deal though I’d have to ask @Jess_OVO to make sure.

 

That’s right, @jules. If you’re extending your plan no exit fess would apply but otherwise a mid-contract tariff hop would be subject to these, so something to bear in mind when comparing options in future.

 

As you mentioned the possibility of cancelling a recent renewal, we’d recommend checking out this related thread. As long as you’re still within the first 14 days of the new plan this cancellation would also be possible without incurring exit fees.

 

Hope this information helps work out the best option for you.

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