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Should I renew onto a fixed plan given the current energy crisis?

  • 23 September 2021
  • 29 replies
  • 991 views

I’m currently at the end of a fixed tariff, with the options seeming to be either a fixed tariff at ~£240/m or the variable tariff at ~£160/m.

Does anyone have any thoughts/input as to how high the variable tariff is likely to be raised, as I’m wondering if going to the Fixed at the moment might be locking in at the peak if the price drops in six months after winter...

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Best answer by nealmurphy 23 September 2021, 16:04

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Updated on 03/05/22 by Jess_OVO

We understand that lots of our members are feeling worried about changes to the energy price cap. That’s why we’ve pulled together some information here to help you understand what’s happening – and how we can help.

 

Hi @gwyn 

Firstly I should point out that everyone’s situation is likely to be different, but a few general points that will hopefully be useful:

The standard variable tariff is price capped. Most suppliers are currently at or just below this cap because the way the wholesale market is at the moment means they are not making any profit. The forthcoming price cap rise comes into force at the beginning of October. This is in place for six months. The next price cap change will take place in April 2022. As the cap is based on wholesale prices the current system will mean that the cap will rise (probably considerably).

A lot of suppliers are offering Fixed tariffs that are fixed for two or more years. These are currently from around 4p/kWh or more above the variable tariff. This would give you some certainty on what you’ll be paying and your price would not be impacted by what happens next April and beyond. If Fixed tariffs start to come down in price next year then you could always swap if this would give you a better rate - having a tariff with no exit fees is useful if you are likely to do this, although you may still be better off switching even with exit fees.

One unknown is what the price of Fixed tariffs will be available in six months’ time. You could chose to go on the variable tariff now and see if there are any deals available prior to April (although if it’s anything like the situation now, getting in early would mean you’d probably get a better deal).

Another thing to watch are the standing charges as these are now varying considerably between suppliers. If you don’t use much energy this will impact on your bills more than if you were a high user of energy.

 

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Although unlikely IMHO... Ofgem can change the price cap more than twice a year. It is just that to date they have only changed it twice a year. There hasn't been any reason to change it more often. The Ofgem rules allow them to change the cap more often. 

We also have the governments Heat and Building strategy which we may finally see before the  COP26 Climate Change  Conference and the government has a budget statement in October. All of these could have an impact on energy bills based on government action. 

Many suppliers have stopped offering the price caped variable tariff to new customers completely for the time being. 

Hello 

I am very confused on the tariffs being offered when my current runs out, the new tariff is 3x higher than present and the fixed rates are basically the same for 1,2,3 years. 
what happened to price cap for both gas and electric the offers are 3 x the price cap. 
where do you get advice on what to choose. 

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Hi @Pitbull10 ,

I’m Blastoise186, one of the forum volunteers. I’m afraid that as it’s New Years Day, it’s unlikely that any of the other forum regulars will be around today.

I can definitely confirm that OVO does respect the price cap you mention, which is the Ofgem Default Tariff Cap. However, suppliers are only required to respect it for Standard Variable Rate tariffs, which in OVO’s case is the Simpler Energy tariff. Suppliers may choose to respect it for Fixed Rate tariffs at the discretion of the supplier. OVO has confirmed that the Simpler Energy tariff is currently within the cap, despite being below actual costs.

As you’ve probably heard, fuel prices have skyrocketed and the only reason Variable Rate tariffs appear to be cheaper right now, is because pretty much all suppliers have pinned them to the cap but cannot go any higher than that. If you choose not to renew onto any of OVO’s fixed rate deals, you’ll automatically roll over to Simpler Energy by default.

With that being said, the price cap is about to be reviewed in the next few weeks, so going down that route may be a gamble that might not pay off. You can switch back to fixed rate at anytime, but I strongly recommend you tread carefully because the rates will likely and inevitably go up again soon anyway.

There’s not really any price comparison sites either right now. Too many suppliers are restricting options so it’s not possible for them to offer a fair comparison.

If it were me, I’d probably lock in a three year deal for now so that you don’t get affected too badly. You can always change the deal later if prices go down.

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Obviously up to you if you want to lock in a fixed rate, either short or long term, or go for the price capped rate. 

All I would add is that as another poster highlighted OVO have been mentioned in the press about staggeringly high fixed rate deals recently compared to other suppliers. I saw the same article. 

I can say that is true for my postcode. Even with the lack of deals from other suppliers there are much cheaper deals elsewhere currently for my post code. 

I don't know the reason why OVO have been quoting some particularly high rates at times, but just be careful. I would not recommend ovo based on my area at least for fixed rate deals. You would need to check if OVO was competitive for your situation. 

With local elections in parts of the UK in May the government are under some pressure to come up with ways of limiting the rises in April, but as @Blastoise186 has correctly said the price cap will have to increase in April. 

My fixed rate hasn't run out yet so i don't need to make a decision at the moment. 

 

 

 

 

Earlier today, I stumbled across the news that Ovo Energy has announced a loss for the latest year of £255M, which might be a factor.

sorry. I am Simon1D really, I didn't know I was logged in this way.

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The amount of energy we use here equates to me playing a large part in that £255m loss (my bad).

the tables will turn in couple of months when my fixed rate term ends, 

checking out today’s rates as a new customer, ovo are quoting me £670 a month on a 1yr fixed deal,

ovo’s as with supplier’s in general, will inevitably like to  claw back a lot of there recent financial losses, all at the expense of the end users & customers. 

 

Tom…

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Depending on the answer I (hopefully) receive, either today or tomorrow I want to come to a final decision;  1 year fixed or Variable.

 

At the moment, I’ve been offered £313 per month 1 year fixed against £139 Variable.  What is the likelihood of that Variable price going above the 1 year fixed price that’s being offered ?  I know there’s a shortage of crystal balls available at the moment but that’s one heck of a difference….

 

Appreciate any positive feedback ;-)

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Firstly, it is better to compare tariff options by looking at the unit rate and standing charge rather than relying on quoted monthly payments as these monthly amounts sometimes take into account credit/debit balances and other factors.

Having said that, taking those amounts at face value, the variable tariff (assuming this is based on the April price cap) would be at that price for 6 months (unless policy is changed), and then is likely to rise (at present assume anything from 20%-50% increase). Therefore with this increase (or even a 100% increase) it would be less than the monthly fixed amount. A longer fix may be worth considering for peace of mind, but a 1 year fix does not really offer that when it’s priced significantly higher than the current variable cap.

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Thank-you for that feedback, very much appreciated and helpful 😉

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As @nealmurphy highlighted

I would check very carefully that the variable rate quote is based on the revised price cap from 1st April. 

Else you might find that variable rate quote is higher in just a few days.

My variable rate quote has yet to refresh. 

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For sure, prices quoted are as of ‘today’ rather than from 1st April...

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For sure, prices quoted are as of ‘today’ rather than from 1st April...

If you contact customer services they can tell you what the 1st April rates will be even though the rates haven't been updated on your quote. But even then i would check they are higher rates. 

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Hi Some people must now be paying the higher rates - as of today.  Could you please tell me what they are?  I appreciate they may vary from region to region I just want an indication for comparison purposes!

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@waiwurrie

I checked a little earlier today and the 1yr Fixed rate deal offer remains (currently) unchanged at £313 but the Simpler Energy went up from £139 to £219.  

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Hi @KevinJH 

Thanks.  What I really need are the standing charge an pence per kW rates as this will allow me to compare with my usage figures.  TIA

Depending on the answer I (hopefully) receive, either today or tomorrow I want to come to a final decision;  1 year fixed or Variable.

 

At the moment, I’ve been offered £313 per month 1 year fixed against £139 Variable.  What is the likelihood of that Variable price going above the 1 year fixed price that’s being offered ?  I know there’s a shortage of crystal balls available at the moment but that’s one heck of a difference….

 

Appreciate any positive feedback ;-)

Hi Kevin - I worked it out for the new variable rate including the daily based on an average yearly usage. I ended up ‘in the same ballpark’ as the advice from OVO. They had already advised me (customer services chat) that the variable would not exceed the fixed (small surprise) and that the 2 year (which I had before) automatically included £10 boiler cover.

my conclusion, go with variable for now as it’s lower price AND I can always switch to fixed if and when it becomes sensible. Hope that helps.

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Being offered:

 

Plan rates 1Yr Fixed
Electricity
Unit rate: 39.23p/kWh
Standing charge: 42.50p/day

Gas
Unit rate: 11.37p/kWh
Standing charge: 27.52p/day

 

Variable Simpler Energy
Electricity 
Unit rate: 29.48p/kWh
Standing charge: 41.65p/day

Gas
Unit rate: 7.32p/kWh
Standing charge: 27.22p/day

HTH

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Awesome - thank you so much.  That works out at very marginally more than the reported industry cap rates from a forum post a month ago.  It means that my fix is now 10% more than the variable but best guesses at the cap in October  put it at  a further 25% up so it should balance out.   However my Feb/March 2year fix is significantly cheaper than the 1year rates you are being offered!

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@Nikrapi 

Many thanks for your response, very much appreciated 👍

My fixed plan is about to run out so OVO are offering me a new fixed plan, which, as expected is double what I currently pay.

first question, does that take into account the credit I’ve built up? 
secondly, the rate showing to move to the variable rate is much lower than the fixed plan, so why should i choose to fix? 
if I do nothing I will move to the variable rate , presumably I can choose to fix it later? 
what’s others experience of moving to the new cap? 
thanks

 

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If you choose to move to the variable rate you can move to a fixed rate later, at any time.

 

Why should you choose the fixed rate? If you think the variable rate will rise above the fixed rate the next time it's reviewed, later this year.

 

The rate you're offered doesn't take your credit into account but the suggested monthly amount should.

Hello all

I am currently on the simpler energy variable plan, My Ovo suggests a choice of fixed price plans but when I click on the link I can see options but I can’t choose any, why is this please?

 

Thanks

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Hi @PF898 Are you able to post a screen shot of what you are looking at? 

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