Ovo hikes prices 7.7% - undoing January's cut
Filed under: Utilities
This seems perverse in an era when we were just getting used to the idea of our bills coming down, so what's going on?
Why?Ovo is far smaller than the big six players, in fact it has around 50,000 customers, which is a fraction of the size of someone like British Gas. Anne Robinson, Director of Consumer Policy at USwitch says: "Because it is a small company and one that is growing quite fast, it's hard for it to predict a long time in advance how much energy it will need, so it buys a lot of its energy in the short-term market."
At a time when energy prices are on the slide, this tends to mean it can be more keenly priced than its competitors. Given that prices have been falling since last Summer, it has been able to stay ahead of much of the market. Now, however, we are seeing a shot-term blip, which means it has to put prices up.
Who next?Robinson says that the good news is that the Big Six are unlikely to respond by pushing their prices up. She says: "Most of their energy - well over three quarters - is bought well in advance - over one three or five years in advance. It means there's no reason why a short-term blip would push up prices at these companies."
Tom Lyon, energy expert at uSwitch.com, adds: "There is a certain irony that while SSE is about to cut its prices at the end of March, Ovo Energy is announcing a price hike. This is going to leave a lot of consumers confused and potentially concerned that today's move heralds a general price hike. But, the fact is that this is part and parcel of the difference between small energy suppliers and the big six.
So what can you do?If you have a fixed term deal with Ovo that's coming to an end, the advice from the experts is to shop around. The recent price changes mean that for an average customer, Ovo may not be the cheapest option.
USwitch points out that while Ovo would cost them £1,140 for fixed price energy, they could get the Go Fix 11 from npower, which would cost an average of £1,033, or the Online Fixed Price Energy July 2013 tariff from Scottish Power, for an average of £1,055.