Ovo Energy launches sub-£1,000 energy tariff

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Ovo Energy has cut its prices to offer the only tariff in the UK available for under £1,000.

Ovo Energy is offering an energy tariff for under £1,000 a year, after cutting its prices.

The Ovo Cheaper Energy Fixed, which is fixed for 12 months, will cost the average household just £998 annually, making it the cheapest tariff on the market.

A typical household - defined by Ofgem as using 13,500 kWh per annum of gas and 3,200 kWh per annum of electricity - pays around £1,315 each year for their energy.

So Ovo's deal could save the average user over £300 over 12 months.

Passing on savings

Ovo has cut its prices after a 9.5% fall in wholesale costs last winter.

The independent firm says it operates on a principle of cost reflexivity, which means charges will always reflect the cost of doing business.

It's calling on other suppliers to do the same rather than locking in high prices through freezing tariffs.

Stephen Fitzpatrick, founder and managing director, Ovo Energy said: "Fair, transparent pricing will help consumers to trust the energy market again. That means when wholesale prices fall, customers shouldn't see prices being frozen, they should see them falling.

"Lower wholesale costs and recent Government policy changes have meant that the cost of energy is lower now than it was 12 months ago. Bills should be too."

Last month SSE pledged to freeze its standard unit prices for two years until 2016, meaning households would pay £1,186 a year on average. And First Utility has today launched the cheapest two-year fixed energy tariff on the market for £1,095.

Tempting switchers

Ovo's latest move could tempt unhappy energy customers.

Just yesterday the Ombudsman Service revealed a 224% rise in gripes about energy firms, reaching a record high of 10,638 complaints in the first quarter of 2014.

And last month Ofgem called for a full market investigation into the Big Six by the Competition and Markets Authority (CMA) after it found evidence of customer distrust, soaring profits, possible tacit coordination and unfair charges for customers that don't switch.

The cheapest energy tariffs

If you're unhappy with your current supplier and want a cheaper deal, here are the best available right now.

Tariff

Average cost

Saving vs typical bill*

Type

Deal period

Cancellation penalties

Ovo Cheaper Energy Fixed

£998

£317

Fixed

12 Months

£30 per fuel if you switch before end of fix.

First Utility iSave `Fixed v18 May 2015

£1,013

£302

Fixed

May 31st 2015

£30 per fuel if you switch before end of fix.

Extra Energy Fixed Price September 2015

£1,014

£301

Fixed

September 30th 2015

£25 per fuel if you switch before end of fix.

Ovo Greener Energy Fixed (Online)

£1,054

£261

Fixed

12 Months

£30 per fuel if you switch before end of fix.

Ovo Better Energy Fixed

£1,058

£257

Fixed

12 Months

£30 per fuel if you switch before end of fix.




Source: energyhelpline.com, 09/04/14

*Savings calculated against an average bill (£1,315) as calculated by Ofgem 2014.

All calculations are for an average usage dual fuel household paying by monthly direct debit.

Average usage as defined by Ofgem is 13,500 kWh pa of gas and 3,200 kWh pa of electricity.

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