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What is OVO's gas unit rate from 1st April 2023?

  • 19 March 2023
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Regarding OVO’s unit rate charge for gas of 9.95p per kWh and standing charge of 27.12p per day…and the new OFGEM price cap for April – June 2023:

https://www.ofgem.gov.uk/publications/ofgem-announces-latest-quarterly-price-cap-update

What will be OVO’s new gas unit rate charged from 1st April? 

Your current charge of 9.95p per KWh compares to a current wholesale rate of approximately 4.29p per KWh (14/03/2023) or a gross margin of 56.8% before your standing charge and before expenses, but appears usurious.  Even the new OFGEM index price used above for the lagged April-June period would argue for a unit rate closer to 8p than 10p.  How much longer will you make extraordinary profits on the gas price you charge us?  Please let us know OVO’s gas unit charge going forward so that we can plan to lower further our gas usage for the next 3 months.

Thank you.

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Best answer by Emmanuelle_OVO 20 March 2023, 12:36

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Blastoise186
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That data will become available from next week onwards.

OVO doesn’t generate energy, so isn’t raking in monster profits

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M.isterW
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The govt announced this week that the energy price guarantee will stay in place at the same level for an additional 3 months. That means prices for consumers shouldn't increase in April.

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Firedog
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… prices for consumers shouldn't increase in April.

 

I’m not sure that’s the case. The new regional EPG rates show some significant changes:

EPG rates Apr - Jun

EPG rates Jan-Mar

 

Apart from that, the capped standing charge looks to be be significantly higher. 
 

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Jeffus
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… prices for consumers shouldn't increase in April.

 

I’m not sure that’s the case. The new regional EPG rates show some significant changes:

EPG rates Apr - Jun

EPG rates Jan-Mar

 

Apart from that, the capped standing charge looks to be be significantly higher. 
 

That is correct. The standing charges are set at exactly the regular OFGEM cap rate which is reset every 3 months (use to be 6 months) 

Then the unit rates are set so the average user (12000kWh gas, 2900kWh electricity) pays an average £2500 over a year via the government Energy Price Guarantee (EPG) including units used , standing charges and VAT. The standing charges aren't capped under the EPG. 

Important to note that this £2500 is an average so some regions pay a bit more, some a bit less.

 

Firedog
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Fair enough - I hadn’t studied the figures in detail. However, I notice that gas users in Bristol will be paying more per therm in Q2 than they were in Q1, for example. 

The effect of the increase in standard charges (15% for electricity) will of course be greatest on those who use the least fuel - the poorest, perhaps, or those who have taken pains to reduce their consumption. 

 

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Jeffus
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Fair enough - I hadn’t studied the figures in detail. However, I notice that gas users in Bristol will be paying more per therm in Q2 than they were in Q1, for example. 

The effect of the increase in standard charges (15% for electricity) will of course be greatest on those who use the least fuel - the poorest, perhaps, or those who have taken pains to reduce their consumption. 

 

Yes, the OFGEM price cap has always been an average as it is more expensive to deliver gas and electricity in some areas of the country. 

In the future we may well see what is known as zonal and nodal priced time of use tariff with very localised pricing. Dramatic change is coming in the next 30 years. 

Emmanuelle_OVO
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Energy Price Guarantee VS Price Cap

 

 

Price Cap


 

On the 27th February 2023 Ofgem, the energy market regulator announced that the energy price cap will decrease in line with wholesale gas prices. 

 

The Price Cap which is set by Ofgem means the maximum cost that a supplier can charge a customer on average, per year. The Price Cap is influenced by wholesale costs. This includes distribution costs in each region. OFGEM takes a look at the underlying costs to supply energy and sets the cap accordingly. 

 

Ofgem have announced that although there’s a decrease to the overall price cap, standing charges will increase. 

 

The average household price cap level for a PAYM customer on a Standard Variable Tariff paying by direct debit is now £3,280, previously it was set to £4,279 per year. This means an overall decrease of £999. For Standard Variable Tariff PAYM on demand will go from £4,533 to £3,482. For prepayment customers the cap will go from £4,358 to £3,325. 

 

However, although Ofgem have announced an overall decrease for the Price Cap, customers will see an increase to their standing charge per year to £300 for Pay Monthly and £350 per year for Pay As You Go. This is due to increased costs to maintain a customers supply and changes to how Ofgem recover ‘underlying costs’. 


 

Energy Price Guarantee

 

The Energy Price Guarantee (EPG) refers to the Government initiative which started October 1st. This limits the annual energy bill for a typical household to £2,500. This was due to be increasing to £3,000 in April 2023, however following the Government’s Spring Budget announcement the EPG will now remain at £2,500. 

 

This EPG extension announcement is good news for our customers! It means price rises will be less than first projected, meaning our customers won’t be impacted quite as much.

 

However, it’s important to understand that energy bills will still increase if you energy consumption does and due to changes to annual standing charges from the Price Cap.

 

The EPG protects customers from increases in energy costs by limiting the amount suppliers can charge per unit of energy used. 

 

The EPG is in addition to the Energy Bills Support Scheme, where every household will receive a £400 discount to help with the cost of energy. You’ll receive £66 in October and November, and then £67 every month until March. 

 

 

How will I find out what my prices will be?

 

Now that we have this information from Ofgem and the Government, we’ll be able to confirm exactly how much our customers will be affected by the incoming price rises from 1 April 2023. We’ll send our customers a Price Increase Notification letter to tell them what their new prices will be. 

 

 

What about Fixed Tariff customer’s moved to the EPG?

 

We made a promise to these customers that we would continue to monitor their accounts and if a customer becomes disadvantaged, we’ll reach out to them and inform them of the next steps. 

 

 

Support available for customers who may be struggling with their bills:

 

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