A message to our customers. Rising energy prices: we’re here to support you
26 August 2022
Part of Ofgem’s job is to set the price that energy suppliers, like us, can charge customers on a standard variable tariff. This is the price cap. Unfortunately, energy prices are rising for everyone and right now there are few, if any, energy deals that are meaningfully cheaper than standard variable tariffs protected by the price cap.
Why we’re in an energy crisis
Renewable energy has come a long way recently, but the world still depends on fossil fuels like oil and gas. The price of these can rise and fall quickly. As the world came out of the pandemic last year, increasing demand for oil and gas started pushing up the global price of energy. In February, Russia’s invasion of Ukraine made a difficult situation even worse.
Before 2022, Europe got more than a third of its gas from Russia, but this year, Russia has almost completely stopped selling gas to Europe. This means the price of energy across Europe is almost 10 times what it was a year ago.
We believe that cheaper renewable power is the future. But right now, there isn’t enough of it to stop the UK from relying on expensive gas and oil for power generation. This is worsened by the fact that the UK has a single price for all its electricity, renewable or fossil-fuel – so the price of electricity is tied to the rising price of gas.
This clearly doesn’t work in the interests of UK energy customers. While the Government is looking into this, the fact is, energy prices aren't going to come down in time for winter.
The Government needs to do even more
Back in May, we welcomed the Government’s announcement of support for energy customers. But after a further increase in energy prices, this is unfortunately now not enough.
We’ve been working together with other suppliers and the Government on a solution that would freeze household energy bills around the price cap level and spread the cost over a longer period. This has wide energy industry support, and we’re ready to get to work with the new Prime Minister in early September.
OVO is an energy supplier, not a generator
We don’t generate electricity or produce natural gas. This means, unlike the generators, we aren’t benefiting from the increase in energy prices. In fact, we’re the only major UK energy company that works this way.
When we launched in 2009, we were founded by energy customers who decided there was a better way. We didn’t want to be a ‘traditional’ energy company – so we set out with a goal to make energy cheaper, greener and simpler, for everyone.
We challenged the big, traditional energy companies to be more transparent about the prices they charged. Over the last 13 years, we’ve seen a lot of change. Not all good, but for the most part, it’s better. Our competitors have raised their game, there’s more choice, and customers are now protected by Ofgem’s price cap.
But the market remains broken in other ways – so we’re still campaigning hard to make the energy system work better for customers.
We need to reform the wholesale market. We need more renewable energy. We need to invest much, much more into the energy efficiency of our homes. Only then can we start to break the UK’s dependence on gas and exposure to its cost.
Help available this winter
The cost of energy is going up all over the world – and prices in the UK will soon follow. We speak to over 250,000 customers on the phone every week, so we know the stress and worry this is already causing, and how many people will face genuine difficulties paying their bills this winter. But there are ways to get support if you need it.
Energy Bills Support Scheme
All households in Great Britain with an electricity supply are getting a £400 discount from the Government to help with the rising cost of energy bills. This is made up of 6 monthly instalments – £66 in October and November, then £67 every month until March.
Government Cost of Living Payment\ Over 8 million eligible low-income households were automatically paid £326 from July. A second payment of £324 is coming in the autumn.
- If you receive tax credits, you’ll get your first payment of £326 in September 2022, followed by a second payment in the winter
- If you receive a qualifying disability benefit, the Government has said you’ll receive a £150 payment from 20th September 2022
- All pensioner households will receive a £300 payment as a top-up to their annual Winter Fuel Payment due across November and December
We’ll soon be announcing details of OVO’s Customer Support Package. A substantial set of measures to help our customers with a real and immediate need this winter. Here’s what it’ll include:
- Direct Debit relief and payment holidays for customers really struggling to pay for their energy
- Dedicated support for our customers in the most financial difficulty from a highly-trained team, including support for those in financial difficulty for the first time
- A range of free and heavily discounted products and services for customers, like smart thermostats, boiler servicing and electric blankets – prioritised for those most in need
For more information please contact: [email protected]