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.”
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.
