Our online management discount saves you £30 a year on each fuel. You’d think the calculation to work out your daily credit would be as simple as dividing £30 by 365 (for each day of the year). But it’s not quite that simple.
So, you save £30 for each fuel, every year. Part of that is paid into your OVO account every day as credit – and part of it comes from the saving you make by not paying VAT on that credit.
Your daily credit amount is £0.078278. That adds up to £28.57147 over a year. It’s nearly £30, but not quite. So how is the extra amount calculated?
Well, every energy bill is subject to 5% VAT. But as we add your credit every day before we add the VAT to your bill, you don’t have to pay it on that portion.
Now, 5% of your daily credit amount (£0.078278) is a saving of £0.0039139, which adds up to £1.4285745 over a year.
So your annual credit of £28.57147 plus your VAT saving of £1.4285745 adds up to £30 – your online management discount for each fuel.
Take a look at this example of a customer’s statement:
You only need to look at two of the figures to see how we calculated the credit amount:
On this statement, the number of days in the billing period is 31 (from 01/03 to 31/03) and the online discount (shown as ‘Your online discount’) is £4.86. We worked out £4.86 by multiplying the daily credit amount of £0.078278 by 31. This gives us £2.426618.
Now for the 5% VAT saving... although you won’t see it on your statement, 5% of that credit amount is a saving of £0.1213309. So, in total, the credit and the 5% VAT saving add up to £2.5479489.
Finally, as this customer gets both their electricity and gas from us, we double £2.5479489 to make £5.0958978. We then round that number up to two decimal points, which gives this customer a total saving of £5.10.