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Sudden price increase in our 2 year fix plan


We renewed our OVO energy contract just 2 months ago to the 2 yr fixed price plan. Having been customers of OVO for several years they had lots of info on our energy consumption. Their offer of a two year fix at £118 per month seemed too good to be true since we had been paying £140per month. I queried the amount several times when we signed up but was assured that £118 would cover our costs. Today, just two months into our contract we have been advised to increase our monthly payment to £128. Whilst we have probably used more gas in the last 2 months than last year due to the cold winter, it seems incredibly quick to make us start to pay more. A good summer could soon reduce our gas bills! I fear it's as we thought - a low offer to tempt us to renew our contract and then bump up our monthly payment.

Has this happened to anyone else? And how did you deal with it? Sit it out hoping your consumption would even out over the year, or increase your payments?
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Best answer by Transparent 23 April 2018, 18:12

Hi @Llandaffian... first posting, I notice! :)

I believe there's no connection between the original offer at £118 and the request to raise the monthly payments. These are assessed by quite different formulae.

I think you're absolutely right to highlight the cold weather spell as the likely culprit. Since this occurred almost as soon as your new contract started, it would be bound to have a large influence on the forward usage prediction.

Two months is actually a very good time for OVO to reassess the payments. The usual complaint I see here is when the request to increase the Direct Debit occurs after the contract is already six months old (or more). In those cases the increase is proportionally higher because it also has to cover 6 months+ of backlog.

I suggest you increase the payments as requested. From reading what others have posted on the Forum, the Usage Prediction algorithm is pretty fair. If we end up with a stunningly warm Indian Summer/Autumn, then no doubt you can lower it again for the final few months. :)

**Updated 24/07/2019**
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Hi @Llandaffian... first posting, I notice! :)

I believe there's no connection between the original offer at £118 and the request to raise the monthly payments. These are assessed by quite different formulae.

I think you're absolutely right to highlight the cold weather spell as the likely culprit. Since this occurred almost as soon as your new contract started, it would be bound to have a large influence on the forward usage prediction.

Two months is actually a very good time for OVO to reassess the payments. The usual complaint I see here is when the request to increase the Direct Debit occurs after the contract is already six months old (or more). In those cases the increase is proportionally higher because it also has to cover 6 months+ of backlog.

I suggest you increase the payments as requested. From reading what others have posted on the Forum, the Usage Prediction algorithm is pretty fair. If we end up with a stunningly warm Indian Summer/Autumn, then no doubt you can lower it again for the final few months. :)

**Updated 24/07/2019**
Thanks. Still feel slightly miffed since OVO continue to forecast our annual costs as 12 X £118! Think I'll let it run a bit and see what happens.
The odd thing is that the predicted monthly price you are shown when being offered a fixed price tariff is the cost for a typical 'medium user' household - your actual historical usage data is not used. So, if you're actually a slightly heavier or lighter user this is not taken into account. It's a bit of a hassle but I always look at my previous year's consumption and do a monthly cost calculation based on the new tariff and the historical usage, and set my direct debit at around that level.

I find it odd that with all the historical usage data Ovo has for me, the estimated monthly cost figure is not personalised to me. I don't find their method of calculating my estimated usage costs very helpful, but I guess the methodology is set by Ofgem perhaps? If they have my data, I don't see why they couldn't also show me a figure alongside the estimated one, based on my actual previous year's usage - this would be very helpful to me.
My direct debit has recently increased, but the amount of energy in 2019 was lower than in 2018. This cannot be due to an increase in energy prices as I have 2 year fix.
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I've moved your query over here, @100425629, take a look at the best answer for more help with this.
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Hi @100425629. The Direct Debit calculator page is the place to check the figures. If the calculator does indeed show that the assessment is markedly wrong, then contact Customer Support.

We are just finishing on a two year fixed tariff for electricity only at £78 a month (we are in a flat). I looked at the tariffs just a week ago and was quoted £90. I have now been quoted £117. Thats a 50% increase on my current tarif!

How can that be justified given that I am still in credit.

I let my fix run the 2 years at the original direct debit amount and ended up around £400 in credit. Now have a quote for a new two year fix just £1 per month higher. Seems reasonable but gas prices have reduced substantially and my quote has only a small reduction in the gas element. Based on my credit I would have expected a lower direct debit prediction. When I did a comparison with other energy companies I found quite large savings could be made. A large part of the saving being due to significantly lower standing charges for both gas and electric. Have others done comparisons with same outcome? We are mulling over whether to make a switch.

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Hey @GEMinStur and @Llandaffian ,

Your renewal quote is based on your estimated annual consumption figures and the new rates available.

There has been a price increase compared to the rates you were fixed into. When a fixed plan ends you are given the new rates available in line with the market price. 

The amount of credit on your account has no impact on the unit rates we offer for a renewal to our customers, you’re free to request a refund for your excess credit, that being said if you have enough excess credit you could use that to make up the extra recommended in the new quote. 

Hope this helps! 

Doesn’t really explain either the reduction in gas price or why standing charges are high compared to other companies quotes on a comparison website. Makes me wonder whether OVO quotes a lower standing charge if you want to switch from another company to them?

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We price inline with the market, @Llandaffian

Our standing charges are a true reflection of the industry costs incurred to transport and maintain the gas and electricity supply which goes to our customers homes. Other suppliers may integrate a large amount of these costs into unit rates instead of having a separate standing charge, or run at a loss-leading rate subsidised by the higher non-contract rates paid by more long standing customers - often those who are less likely to switch. We review our prices on a regular basis and have been just as quick to drop our prices in the past when we have seen decreases in commodity cost.

We don’t offer different rates based on tenure. 

Thanks! 

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Hi @Llandaffian - interesting observations.

@GEMinStur  I think there’s a fair amount of fluctuation in OVO’s tariffs. I checked several times in November 2019 when my 2-year Fixed Tariff was shortly due for renewal. On the day I actually decided to renew, the 1-year Fixed Tariff had remained where it had been the previous week, but the 2-year Fixed had decreased significantly.

Well, you can guess which one I opted for!

I’m actually looking forward to the day when OVO’ eventually offer a half-hour variable tariff. One of the current problems with such a tariff is that the Network-Charge for electricity stays static regardless of the time of day or what extent of the grid my electricity has used.

As I live in an area with a surplus of renewable energy, I don’t think I should be paying a levy to National Grid for electricity which has never passed across their cables!

There are quite technical reasons why this is difficult to change, but it is a subject which I discussed with my MP in December. So if the Energy Industry doesn’t start making progress to resolve the issue, then I think they’ll find Parliament putting them under pressure!

 

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