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Why are the costs of the fixed plans being offered during my renewal period so much higher this year?

  • 9 November 2021
  • 6 replies
  • 61 views

Hi, My simpler tariff has just ended where I was paying £125 a month by DD

I have just been moved to a variable tariff with the option of a 2  or 3 year fixed plan at a whopping $187 or £236 per month.

This is an increase of £744 on the 2 year plan, outrageous!

Please can someone explain this to me?

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Best answer by Jess_OVO 9 November 2021, 18:00

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Hi @Martin King .

This is heavily down to the extremely high energy prices on the market right now, but the variable rate Simpler Energy tariff is not affected due to the Ofgem Price Cap, although it does cause suppliers to make a loss since the current price caps are below cost price.

While you’re on Simpler Energy though, you can leave the renewal offer open and keep an eye on it for now. You don’t have to renew straight away so if you give it a few months or so, things should calm down and get back to normal.

Userlevel 7

Recently, wholesale natural gas prices have been pushed up by many factors.

 

They’ve been rising across the globe, caused by lots of things – like a slowdown in wind energy, the UK’s relatively low levels of gas storage capacity, and economies switching back on again after Covid-19.

 

Unfortunately, this is affecting all energy suppliers. You can read more about all this in our blog post here and our FAQs here.

 

If you are worried about the impact of these price increases there are lots of ways we can help, so do call us if you’re struggling. The Ofgem website outlines helpful resources too. And the following organisations offer brilliant support if you need help with energy-efficiency and bills. 

Hi, Thanks for the prompt reply.

It was certainly a major shock to see an increase of nearly £750!

Presumably if I went for the 2 or 3 year lock in tariff and energy price eased down I would be “bolted in” to paying the higher tariff?

Are you saying that if I do nothing for now I will still be on the Simpler Tariff?

The email I got seemed to say that I would now be on a variable tariff not fixed price which is what I thought the Simpler tariff was?

Regards, Martin

Also the Government are publishing figures saying that the average increase will cost users about £139 per annum more. That is a looooong way from £750!

Martin

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Also the Government are publishing figures saying that the average increase will cost users about £139 per annum more. That is a looooong way from £750!

Martin

Based on your previous DD amount it looks as though you may be an above average energy user, hence the size of the increase. It also depends on when you fixed your previous tariff as the increase would vary if your previous rate was fixed 1 year ago or 2 years ago, or longer.

As for being ‘bolted in’ to the higher fixed prices, that’s not the case. You can always choose to switch tariff or supplier. Some suppliers charge exit fees when you leave a fixed tariff before its end. The price of switching from an existing fixed tariff therefore varies from £0 to £100+, so check your tariff details.

 

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Simpler Energy is indeed OVO’s standard variable rate tariff and like all standard variable tariffs, it does not lock you in at all. It simply runs on a sort of rolling contract basis which allows you to break contract freely at anytime without penalty. There does technically still need to be a “contract” anyway on variable rate tariffs - mainly to keep the lawyers happy - but it’s done in a different way to fixed rate contracts.

As long as you don’t make any choices otherwise, that’s what you’ll be on for the time being. You’ll only start a new fixed term if you explicitly make that choice.

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