Energy supplier Ovo ramps up costs by 7.7%

by Matt Ridout on 20 March 2012  |  3 comments
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As Ovo increases prices by 7.7%, there are fears this is just the start of a new round of price rises.

Last week the small energy supplier Ovo announced a price rise that will see its dual fuel tariffs increase by 7.7%, raising the average annual dual fuel bill for an Ovo fixed tariff customer to around £1,140. Ovo has blamed the rising price of wholesale energy for the price hike.

Ovo, which traditionally is one of the first to instigate price changes, was in fact one of the first to drop its prices in January, a move which led to industry-wide price reductions. However, this price rise more than reverses its 5% reduction from a few months ago.

The concern for many will be that the Big Six companies will follow suit and raise their rates. Smaller utility companies like Ovo are generally quicker to pass on any fluctuations in the wholesale markets to their customers, whether those are increases or decreases, whereas the members of the Big Six are usually more able to absorb them.

However, with wholesale prices continuing to rise there is a distinct possibility that Big Six companies may hike prices again, and it is almost certain that there won’t be any more price reductions in the short term.

So the best advice we can offer is to compare your energy supplier and tariff now using a price comparison service. With prices changing regularly and new deals becoming available, it is always good practice to check often to make sure that you are on the best possible deal.

* against typical bill of £1,345 per year as estimated by Ofgem. All costs are for a yearly average usage dual fuel household paying by monthly direct debit. Average usage defined by Ofgem as 16,500 kWh p.a. of gas and 3,300 kWh p.a. of electricity.

Compare energy tariffs at lovemoney.com