September 30, 2023

UK’s leading 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 existing customers a £2,275 a year fixed tariff – undercutting the government’s Energy Price Guarantee (EPG).

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EPGs reduce the amount people can be charged per unit of gas or electricity, to the annual equivalent of around £2,500 for a typical household in the UK, compared to the energy price without the rebate.

People need to be very careful not to jump on a fix just because it costs less than what they are paying now

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In his budget on 15 March, Chancellor Jeremy Hunt committed to maintaining the EPG at its £2,500 level from April to June, due to rise to £3,000 in April.

Ovo, which has around four million customers, reportedly said it launched its new tariff because customers wanted “the security of a long-term fix to protect them against continued energy price uncertainty”.

But Martin Lewis, founder of Money Saving Expert, said “people need to be very careful not to jump on a fix just because it costs less than they are paying now”.

In a statement, he said: “If you’re on a standard tariff, the rates you pay are governed by a cap.

“That limit is currently set by the Energy Price Guarantee, and will remain roughly constant until the end of June.

“After that, because wholesale rates – the rates paid by energy firms – have fallen, it is likely that the price cap will fall, and on current forecasts this means you could be paying 20% ​​lower rates than you are now.” Will start.”

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He predicted the price to “stay around that point” through the end of the year and into early 2024.

Wholesale gas prices have fallen by nearly 80% since August last year, according to the Resolution Foundation, a standards-of-living think tank.