Everything you need to know about the upcoming price changes for variable members

On 1 April, we changed our prices for members on our variable plan.

We know this is a worrying time for our members. It’s why we’ve put together these frequently asked questions – to help you understand what’s happening, and make sure you know about all the help that’s available. We’re here to support you.

How the Price Cap affects you

The price cap is set by Ofgem, and it puts a limit on the rates energy suppliers are able to charge on variable plans. The amount you pay will also depend on how much energy you’re using. Ofgem announced that the energy price cap would increase on 1 April 2022. On the same date, we increased the prices on our Simpler Energy plan tariff in line with the cap.

We sent letters and emails to our members whose prices would be changing, so you’d be able to see how the changes would affect your bills. If you’re on a variable tariff, or your fixed tariff was about to end, you should have received yours already. This letter included your new energy prices and a personalised projection of your future bills based on your exact or estimated energy use.

We're aimed for all members to have received their new prices by 12 March. But the new prices came into effect on the 1 April.

We sent out new prices to all our members who'd be affected by this price increase. You’ll have been affected if you’re on a variable plan, or if your fixed-rate plan was about to come to an end.

All members should have had their new prices by 12 March. But the new prices came into effect on the 1 April

You’ll either have got an email or letter with your new prices (depending on how you prefer to be contacted). It would have shown your current and future prices, based on how much energy you’re projected to use.

We’ll get in touch over the coming weeks, if your Direct Debit needs to change. If you’re worried about this, we’ll be able to help.

Other factors that can also affect your Direct Debit are how much energy you’re using and how much credit you have in your energy account.

We base your Direct Debit payment on your energy prices and how much energy we think you’ll use (by looking at how much you’ve used in the past).

We’ll ask you to increase your Direct Debit, if it looks like you might have a negative balance at the end of your yearly billing period. Increasing your Direct Debit spreads the cost of your energy, and helps protect you from having to pay a lump sum – later down the line.

We’ll never charge you more than the price cap, if you’re on a variable plan. It’s worth knowing that fixed-rate plans aren’t affected by the price cap.

It’s also important to be aware that the figure of £1,971 (which is often used by Ofgem when talking about the price cap for pay monthly plans) is the average yearly cost of energy per household. If your home uses more energy than that, then the yearly cost will be higher.\ \ The price cap is there to set the maximum rate you can be charged per kWh of energy, on a variable plan. This is known as the unit rate. The price cap also sets the standing charge – this is the amount you pay per day to stay connected to the grid (covering the costs for things like power lines and pipes).

Using more energy will also cause bills to go up – whichever type of tariff you’re on, whether it’s variable or fixed.

If you’re worried about the cost of energy, we’re here to support you.

While we’d love for you to stay with us, we understand if you decide to switch. If your new energy supplier tells us you’re switching within 20 working days of 1 April, then you’ll stay on your current rates until you leave us.

You’ll need to pay off any negative balance you might have in your energy account before you go, to make sure your switch goes smoothly. We’ll let you know if there’s anything left to pay – and you can always get in touch if you’re worried about this.

If everything’s paid off within 30 days, your switch can go ahead and the new price change won’t affect you.

No, it only affects members on our variable plan, Simpler Energy. But if you’re coming to the end of your fixed-rate plan, then you might be affected by the price cap. This is because you’ll be automatically moved to our variable plan if you don’t fix your prices again. We’ll be in touch about your options, giving you all the information you need to decide what’s right for you.

This handy guide walks you through all the steps.

We understand that lots of our members are feeling worried about changes to the energy price cap. We regularly review our prices to make sure they’re fair. If we decide to change prices, we’ll give you plenty of notice.

This is because gas is also used to generate a lot of electricity. In 2020, 35.7% of the electricity produced in the UK was created by burning natural gas1.

Even if you only buy electricity from us, wholesale gas is still used to produce that electricity. Since the price of wholesale gas has gone up, this means that electricity is more expensive to produce. Unfortunately, this means the price of your electricity has also gone up.

1https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1032260/UK_Energy_in_Brief_2021.pdf

What the price cap is and why it’s rising

The energy price cap is set by Ofgem, the energy regulator, to put a limit on what energy suppliers can charge on variable plans. The cap takes into account costs energy suppliers are facing, while making sure prices are fair. It can go up or down – depending on the cost of wholesale energy. 

As of 1 April 2022, the new price cap is £1971.

It’s important to be aware that the figure of £1971 (which is often used by Ofgem when talking about the price cap) is the average yearly cost of energy per household. If your home uses more energy than that, then the yearly cost will be higher. 

The price cap sets the maximum rate you can be charged per kWh of energy, on a variable plan. This is known as the unit rate. The price cap also sets the standing charge – this is the amount you pay per day to stay connected to the grid (covering the costs for things like power lines and pipes).

Using more energy will also cause bills to go up and it’s the other main factor that affects costs – whichever type of plan you’re on, whether it’s variable or fixed-rate. If you’re worried about your energy costs, we’re here to support you.

Prices will stay this way from 1 April to 30 September 2022.

We’ll always give you plenty of notice, whenever your energy prices are going to change.

The main cause is the rising cost of wholesale energy (this is the price we pay to buy energy from the companies that generate it). It’s more than doubled over the last year, and that huge rise has been driven by a number of things, including:

  • Countries returning to normal after lockdowns
  • And a decreased gas supply coming from Russia into Europe

Ofgem sets the energy price cap by looking at the wholesale energy market. The aim is to keep prices fair for both customers and energy suppliers.

The calculations behind the cap are based on how much Ofgem thinks it will cost energy suppliers to buy the energy they need for their customers. Ofgem also factors in things like operating costs. This is the money energy suppliers spend on things like billing and installing meters, and network costs (the price of maintaining the pipes and wires that transport gas and electricity to your home).

To work out how much customers should be billed, Ofgem use Typical Domestic Consumption Values (TDCVs). These are statistics that Ofgem produces every 2 years, showing what the average low, medium, or high energy use per household is.

This is an industry-wide issue and it’s clear that more drastic and longer term action is needed. We’ve been working with the government, Ofgem, and our charity partners, because reform needs to happen as quickly as possible. We promise you, we won’t stop until energy is fairer for all.

The cost of keeping the network running has gone up, which means the standing charge has risen too. The standing charge covers the extra costs of supplying your home with energy. These include connecting your home to the energy network and maintaining the wires and pipes that carry gas and electricity to your home.

It’s tough to say how prices will change in future – nobody knows for certain. The changes in the wholesale energy market have been driven by a number of things, including:

  • An increase in global demand for energy as countries return to normal after lockdowns
  • And a decreased gas supply coming from Russia into Europe 

These factors are really complex, and unusual. We’ll be keeping our members updated on how it affects them as the situation develops.

Like all energy suppliers, our members will be part of October's £200 energy loan scheme. We're actively planning with the government on how best to roll it out to our members.

Financial support: how we can help

There is help available if you’re struggling to pay your energy bills – both from us here at OVO Energy and from government schemes and charities as well.

There are many ways we can help – such as setting up a payment plan for you, which spreads the cost of your energy to make it more manageable. If you want to find out about payment plans, you can request one online here – we’ll take you through what you need to do, and ask you for some details.

Our dedicated team is also specially trained to support you. They can make sure you’re receiving any financial assistance from the government that you’re eligible for, and take you through payment support schemes that are available. 

You can find out more about these schemes and where to seek free, independent advice right here.

Here’s some information that might help, when it comes to managing your energy account. It’s easiest to manage all this through your online account. If you don’t have one you can set one up here.

  • You could save up to £129 per year if you switch from paying On Demand (on receipt of your bill) to paying by Direct Debit as our prices are lower for Direct Debit customers.
  • Sending regular meter readings. Without meter readings, we have to estimate your bills and this can mean they aren’t 100% accurate. You could be paying too much or too little for your energy. To stay up to date, submit your readings here if you’ve got a traditional meter. 
  • Getting a smart meter. Smart meters send readings for you, which means we know exactly how much energy you’re using – so your energy account is always up to date. They can also help you track your energy use in real-time. You can book your free appointment to get one installed here. 
  • Keeping an eye on fixed energy deals. Many of our members choose a fixed plan, for the peace of mind that comes with knowing prices are fixed for at least a year. If you’re interested in finding out more, head here. We’ll always tell you on your bill if you could switch to a cheaper plan with us. 
  • The Centre for Sustainable Energy can give you free, impartial advice on saving energy. Just visit cse.org.uk/ovoboost

1This saving is based on the difference between Direct Debit prices and On Demand prices and using Typical Domestic Consumption Values (TDCV) for a dual fuel customer. TCDV are 2,900kWh of electricity, 12,000kWh of gas, and 4,200 kWh of Electricity on Economy 7 rates.

If you’ve joined OVO from SSE

Unfortunately, the cost of wholesale energy has been rising significantly – it’s more than doubled over the last year.

When reviewing the price cap, Ofgem made the decision to raise it, to reflect the change in the cost of wholesale energy. We changed our prices on variable plans in line with that from 1 April – for both OVO and SSE too. The prices will be exactly the same. 

If you’re worried about your energy costs, we’re here to support you.

Your prices should be exactly the same.

If you joined on a variable plan, your prices will be exactly the same as they were with SSE.

If you had a fixed-rate plan with SSE and you’ve now moved to OVO, you’ll be on the same plan with the same prices, as well as the same terms and conditions.

If your fixed-rate plan is coming to end, you’ll move on to our variable plan automatically – unless you choose a new fixed-rate plan. We’ll be in touch about the different options available, to make sure you have all the information you need to choose a plan that’s right for you.

Managing your account

We’re sorry if we haven’t answered your call in time.

Unfortunately, news about the energy price cap has meant we’re getting a lot more calls than normal at the moment. We expect it to be busier than usual over the next few weeks.

That’s why we’ve put together these helpful FAQs – to make sure you can get answers fast.

In most cases, it’s quick and easy to do things online.

It’s easiest and fastest to submit one online.

You can send us a meter reading here.

Or, you can always get a smart meter to send it for you. Book your free appointment here.

It's all to do with the way we round the numbers. This is to make the figures more easily digestible when you read them. Your bill will always be accurate to 2 decimal places.

Having more than one Direct Debit increase in a short amount of time is usually rare, and we’re sorry if this has happened to you recently. 

We need to make sure your payments cover your future energy use and your prices. Because energy prices are going up, your energy use is likely to cost more in future – and your Direct Debit will need to cover it.

It’s important to log in to your online account at least once a month to keep an eye on energy usage and payments. If you don't have one, you can register here.

If you have excess credit, you can request a refund at any time, but we recommend keeping enough credit in your account to cover your next 3 months of energy use.

With a fixed plan, the price you pay per unit of energy is fixed for the length of your contract. Your monthly bills can still vary, depending on how much energy you use or if you’ve purchased any monthly add-ons.

If you use more energy than we expected, or we think you might have a negative balance by the end of your annual billing cycle, we'll let you know that your Direct Debit needs to increase.