Ovo launches energy deal below Government price cap
Major UK energy supplier Ovo has offered its first deal below the Government’s £2,500 cap on typical household bills amid falling wholesale gas prices.
The energy giant is offering a one-year fixed tariff of £2,275 to existing customers – undercutting the Government’s energy price guarantee (EPG).
The EPG reduces, compared to the undiscounted price of energy, the amount people can be charged per unit of gas or electricity, to an annual equivalent of around £2,500 for a typical household in Britain.
In his Budget on March 15, Chancellor Jeremy Hunt committed to maintaining the EPG at its £2,500 level from April to June, after it had been due to rise to £3,000 in April.
Ovo, which has about four million customers, reportedly said it launched its new tariff because customers desired “the security of a long-term fix to protect them against the continuing energy price uncertainty”.
But Martin Lewis, founder of MoneySaving Expert, said “people need to be very careful not to just jump on a fix because it costs less than they’re paying right now”.
In a statement, he added: “If you’re on a standard tariff, the rates you pay are governed by a cap.
“That cap is currently set by the Energy Price Guarantee, and will stay roughly stable until the end of June.
“After that, because wholesale rates – the rates energy firms pay – have dropped, it’s likely the price cap will drop, and on current predictions that means you’ll start paying 20% lower rates than now.”
He said the price is predicted to “stay around that point” until the end of the year and into early 2024.
Wholesale gas prices have fallen by around 80% since August last year, according to the Resolution Foundation, a living standards think tank.