Why energy is headline news, and what this means
23 September 2021 | OVO Energy
If you’ve been keeping an eye on the news lately, you’ll know that the energy industry is facing challenges – in fact it’s headline news. That’s why our focus this week has been to reassure OVO Energy members that your supply is perfectly safe and sound.
Here, we explore what’s driving the issue and what it means for our members.
The main problem is that wholesale gas prices have rocketed
This is due to a combination of factors, some of which you can read about in this government explainer. We've outlined the main ones below:
- Global economies are ramping up again after Covid-19, which is driving increased demand for gas
- Lower than normal wind energy output through 2021 caused the UK to fall back on electricity generated by power plants, the majority of which burn gas
- European gas storage levels are below normal levels due to a cold spring earlier this year and reduced gas imports into Europe from Russia
It’s fair to say that this is an unusual time for the UK industry, and it’s not surprising that people are worried about it.
OVO Energy is in a strong position because we buy most of our energy in advance
At OVO Energy, we buy most of our energy in advance. This means we have a good idea about how many homes we’ll supply – and how much energy they’ll use. It’s impossible to predict exactly how much energy we’ll need to supply at any given moment, so we buy extra energy closer to the time, if we need it.
We sometimes explain it in terms of buying oranges. We might know for certain that we need to buy 5 oranges for lunch. But if later we find out a couple more people are joining us, we’ll go out and buy another 2.
The fact that we operate this way means that we’ve already secured lots of the energy we need for the coming months. We’ll be paying more for the extra energy we need, but we won’t be affected like suppliers who don’t buy in advance like we do.
This means our members can feel safe in the knowledge that we’ll be there for them this winter.
If you have a fixed plan with OVO Energy, there won’t be any changes to your energy prices before your contract ends. And if you’re on a variable plan, you won’t pay more than the government price cap – which was last updated on 1 October.
We will be contacting all our members on a variable plan, and those about to roll onto a variable plan, in February when Ofgem announce the level of the next Price Cap, which will come into effect on 1 April. We’ll advise you of changes to the price cap, and what alternative options and support OVO can offer.
We’ll do everything we can to support the most vulnerable
We know the last 18 months have been particularly difficult for many. Our team is specially trained to help anyone worried about paying their bills this winter. There are lots of ways we can help.
The Ofgem website outlines helpful resources too. And the following organisations offer brilliant support if you need help with energy-efficiency and bills.
- Citizens Advice offers free and impartial advice.
- Step Change is a debt advice charity that can give you free help and advice.
- Energy Saving Trust has lots of free practical help with cutting energy waste and bills.
Saving energy is one way to help lower bills
Saving energy will help get bills under control – it’s always a good idea. That’s why we’ve put together lots of energy-saving tips here. Doing things like bleeding your radiators, turning your thermostat down by 1C, and switching things off at the wall all adds up.
Smart meters also show your energy use in £ and p, helping you spot more ways to save energy. They also help us to accurately predict how much energy the nation needs and reduce waste in the system. Find out how to book your free smart meter appointment here.
Saving energy cuts carbon emissions, so we’ll be doing our bit for the planet too. And it will help reduce pressure on the UK’s energy supply.
We understand that the news about the energy market can feel unsettling. Lots of people are calling right now because of this, and it might take us a little longer to answer. We’ve put together these FAQs to reassure you, in case you’ve got any questions or worries. The main thing to remember is: we’re here to help keep you cosy this winter, as always.