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What’s happening with energy prices? Let’s take a look.

What’s happening with energy prices? Let’s take a look.
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Updated on 26/08/22 by Tim_OVO: Here’s the latest information on rising energy prices, and how we can help. Energy Bills Support Scheme page here. Ways to get financial help FAQs here

 

You might be wondering why we’re all experiencing such high energy prices right now...

 

Why are energy prices so high?  

 

There are many things that have contributed to rising prices.  

 

The two main factors are increased demand for gas as the Coronavirus  pandemic eased, and because the war in Ukraine has threatened  supplies from Russia. 

 

Just how much have wholesale prices risen?

 

This chart shows the rate at which prices have increased. 

 

Information correct as of July 2022
Source: ofgem.gov.uk/wholesale-market-indicators

 

Isn’t there a way to plan for this? 

 

You may have heard of ‘hedging’, which is when we buy energy ahead  of time to get a better price. This provides some protection for our  customers against rising prices, but we still have to buy energy on the  open market. 

 

Have you hedged well? 

 

Yes. Our analysts expected the supply of energy to be reduced, so they  were able to secure good prices. As a result, we have access to the energy  we need to supply all of our customers for the foreseeable future. 

 

If you’ve hedged well, why is my bill still going up? 

 

Not all of the energy we buy can be hedged, so we still need to use the  open market and buy energy at its live price. This means our variable  prices have had to increase. If you’ve fixed your prices, the cost you pay per  unit of your energy won’t change until your fixed term ends. 

 

But aren’t energy companies making record profits? 

 

That’s the electricity generators and gas producers who we buy our  energy from on the wholesale market. The energy price cap limits the  price energy suppliers can charge for their variable plan. 

 

What about the energy price cap? 

 

The Ofgem price cap limits what energy suppliers like us can charge for  the energy we provide to customers on variable plans. The level the cap  is set at means most energy suppliers are now selling below the cost we buy energy for. From October 2022 the price cap will be updated every  three months, instead of every six months, which means prices will  change more frequently.  

 

What can I do to control what I pay? 

 

The easiest way to avoid price changes is to choose a fixed energy plan.  We always make sure our best fixed prices are available to our customers,  but please remember that if you’re already on a fixed deal you may need  to pay an exit fee. 

 

What are you doing to help? 

 

If you’re struggling to pay your energy bills, please let us know. As well  as finding a payment plan that works for you, we can go through ways to  bring down your bills. Plus, we’ll tell you about other organisations that  can help with debts. 

 

Find out more at ovoenergy.com/help/debt-and-energy-assistance 

 

Some financial support is also available from the Government. You can find  out more at costoflivingsupport.campaign.gov.uk


20 replies

OK ,  I've just been moved to Ovo , I wasn't actually aware , I just got an email to say I'd been moved . 

I used roughly £18.00 of electricity last month , how will the new fixed rate at £91 a month benefit me ? Are there tariff for low /light users  ... all the fixed rates are more than I can afford . The only thing I use constantly is the fridge , I boil a kettle to wash up and use an electric shower.

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Hi @Aquamarina ,

Just so you know, I’m one of the forum volunteers, so I can’t access your account directly.

As far as I’m aware, the quotes you’ll be offered are intended to match your usage patterns and history as closely as possible, while also including various other factors. If you’d rather not do a fixed rate, your only other option is to let your current contract expire and move to variable rate automatically - but I would still suggest considering fixed rate if you can. Prices are through the roof either way and I’d rather you were aware of this upfront to help you figure things out. Regardless of what you do, I’m afraid you probably won’t be paying £18 a month for much longer.

Don’t forget you’ve still got the £400 Energy Bill Discount thing on the way as well, which will be applied as account credits over six months.

If you desperately need to have the Direct Debit reduced to below what the system is allowing, the Support Team can assist. And please don’t struggle in silence with energy bills, OVO will help you out if you ask for it. More details can be found here and I promise you that you definitely won’t get in trouble if you ask for OVO’s help so please don’t be afraid to talk to them.

If there’s anything else I can help with, please let me know.

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Hi @Aquamarina

It is a worrying time. Like @Blastoise186 i don't work for ovo.

There are a few things we can suggest for you to check if you like?

Firstly on this page on the website rather than the app. 

https://account.ovoenergy.com/plan

You will see something called Future Annual Consumption. This is OVOs estimate of what you will use over a year. Does that look correct? It is used to calculate the estimated direct debit you are seeing in the quotes. 

 

Userlevel 3

Seeing the current plans for renewing is a little scary, variable projections are half the cost and its easy to see when looking at current unit rates.

At the moment I'm on Ovo drive with anytime addon, will the anytime addon keep working at its current price? Basically that is my deciding factor and having just had an Indra smart installed it’s upsetting if I basically loose the advantage after paying out for it to be installed!

I Apricate Ovo are probably loosing money on  my current tariff, ,still 6x increase in gas prices for fixed term is a little scary, was expecting a 4x increase on electric, judging from the the news I can only presume things will get worse before they get better but its still hard to swallow the variable prices being half the cost .. 

Would love variable with anytime drive addon but I understand that doesn’t really work for Ovo!

the energy price is growing, but some salaries not. very interesting situation

I'll check that out  , I've made switches to LED lights , street lights so I don't need the lights on , I boil the kettle and keep the washing up for one hit. I don't watch TV anymore . The fridge is the only thing on all the time , I time showers and do 2 washes a week, I can't cut back anymore than I have done 

Userlevel 7

Hi @Aquamarina and welcome to the OVO online community,

 

It’s so nice to see our community members offering some advice and support to help in this challenging time.

 

Have you managed to get logged in to your online account or OVO app (download for Android or iOS) yet? This can really help keep an eye on your account.

 

If you’re worried about the upcoming price increases we’d always recommend getting in touch with our Support Team. They’re here to help you work out the best option for you.

I took out a fixed contract on the 1st August 2022 before I took out the fixed contract my electricity units were 19.02 pence after the 2nd of August they have almost trebled to nearly 53p per unit .

Any advice would be appreciated 

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I took out a fixed contract on the 1st August 2022 before I took out the fixed contract my electricity units were 19.02 pence after the 2nd of August they have almost trebled to nearly 53p per unit .

Any advice would be appreciated 

Hi @Drizzle.11

I don't work for OVO. I am just a customer like you. A few of us respond with posts where we think we might be able to help.

Unfortunately 53p a unit for electricity looks correct for a fixed rate. Prices have gone up dramatically and are likely to keep going up over winter. Fixed rates are higher than 53p already. 

From your post i assume 19.02p was a previous fixed rate deal.

You can ask to go on the variable price cap rate which will go up in Oct, Jan, Apr. but honestly i doubt that will work out cheaper unfortunately over the period. You have 14 days to do that so would need to phone up tomorrow. 

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@Jeffus is correct. 53p/kWh for a fixed electricity tariff is now considered to be a good rate, I'm afraid. October variable cap likely to be around 50p/kWh. We will see how suppliers chose to price their variable tariff, but I can't see many pricing much lower than this.

You could go to the variable but, based on current predictions and the pricing structure that is currently in place, the price could reach 80p/kWh in April 2023.

Thanks for the advice guys.

So the OVO website says OVO sources its electricity supplies solely from renewables

 

Where does our electricity come from?

It's really simple. Just 1 source: renewables.

 

Perhaps someone can explain then why OVO are increasing the price of a unit when renewable costs have not increased.

Userlevel 7

Hi @Finnz, it’s a reasonable question to ask.

 

The short answer (which I’m only just about qualified to feel confidant in saying I know about) is that renewable energy is sold on wholesale markets, just like fossil fuels. Below you can see the price increases for these:

 

 

Just how much have wholesale prices risen?

 

This chart shows the rate at which prices have increased. 

 

Information correct as of July 2022
Source: ofgem.gov.uk/wholesale-market-indicators

 

 

Userlevel 1

I cannot find the actual price per unit and standing charge data for the price cap on the Ofgem website.

It is quoted instead as Other Payment Method (think this is direct debit), value of zero kwh for a year (think this is the standard charge) and price for 3100 kwh (includes standing charge)

Working this in a spreadsheet, I get for direct debit payment, single electric tariff, the following rates (including VAT)

Electricity

Region

Standing Charge (p) per day

kwh (p)

North West

43.26

51.32433871

Northern

49.93109589

50.08804839

Yorkshire

49.54561644

50.87724194

Northern Scotland

51.07315068

50.91653226

Southern

44.41356164

52.07424194

Southern Scotland

50.66465753

51.61122581

N Wales and Mersey

48.59630137

53.83112903

London

33.1569863

53.64551613

South East

42.67890411

53.16251613

Eastern

38.93630137

52.90509677

East Midlands

45.76849315

50.86640323

Midlands

49.14575342

51.57498387

Southern Western

52.64383562

51.70809677

South Wales

49.16876712

51.82122581

 

I have calculated by dividing the standing charge by 365 for the daily standing charge

From the value for 3100kwh (which includes the standing charge) I have deducted the standing charge and then divided by 3100 to get the price per kwh.

I then applied VAT to get the table above.  Has anyone in OVO been given or has calculated the unit rates?  Not sure that any of this is correct!

 

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@Russell

The unit rate and standing charge for each region and payment type is on the following page

https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/

Userlevel 1

@Jeffus 

Thanks for the link

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Unless you are very interested in energy pricing this can be very confusing and worrying. But the past is gone and finished and at the moment the price cap rates will rise circa 80% in October followed by another increase in January. Fixed prices factor in these increases which is why compared to the current price capped rates they look expensive. In reality they may turn out to be cheap- they certainly offer certainty for their duration. The government will be forced to give even greater financial help focussed mainly on those really struggling.

I strongly recommend that people paying via Direct Debit continue to do so. Paying by standard credit methods will cost the average customer £200+ per year based on the October price caps, so will only make the situation even worse.

By the link provided higher up it seems that OVO IS OVER ESTIMATING MY GAS by about 3000 khw

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I hope mine doesn't go up too much.

 

Loving my vehicle to grid tarrif.…

Last months dual fuel bill.....

@Tim_OVO , @Blastoise186 ,i know it's not 0 but it's lowest I have managed to date.... my DD is still 400/month!

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XD

 

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