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Ovo Energy cuts energy prices – Could UK energy prices be falling?

Ovo Energy today cut its prices for new customers by 4.5% with immediate effect. The move will see its cheapest plan, New Energy Fixed, fall from £1,140 a year to £1,088 a year, leaving it the 5th cheapest provider on the market.

Existing Ovo Energy customers will be able to switch to the tariff when their current fixed price expires.

The news follows the announcement yesterday that First:Utility has replaced its iSave Dual Fuel V10 plan with iSave Dual Fuel V11, which is £101 more expensive with an annual cost of  £1,128 a year. First Utility had previously been Britain’s cheapest supplier.

First Utility is a variable tariff, whereas Ovo is a fixed price tariff.

The fluctuations signal further changes to the UK’s energy prices. Last month, energy suppliers British Gas and SSE warned that future energy prices were a possibility in the near future.

Uncertainty around energy prices remains and recent research by uSwitch revealed that UK energy prices were rising 5 times faster than household income  and have risen by £730 since 2004.

SSE has committed to retaining its prices until October this year, while E.ON has guaranteed to hold its prices for the rest of this year.

However, wholesale gas prices have been falling, which could remove the need for any price hikes at all and could mean a reduction in domestic gas prices.

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‘Bitter-sweet week’

uSwitch energy expert, Tom Lyon commented: “This has been a bitter-sweet week for consumers with one supplier pushing prices up while another is pulling them down. Ovo Energy is reacting to lower wholesale prices by passing the benefits on to new customers.

“This highly proactive approach is something that we’re coming to expect from this new supplier and which many of its customers will appreciate.

Even after its price cut there are cheaper suppliers out there, but Ovo is differentiating itself through its attitude and transparency rather than on price alone.

“But the move also highlights the uncertainty over where household energy prices will be heading this winter. Early indications from the big six suggested a price hike this winter, but now wholesale prices are dropping. And while Ovo Energy has cut its prices, First:Utility has pushed its prices up.

“The fact is that if wholesale gas prices continue to fall it will make it extremely difficult for the big six to justify a price hike – they could even find themselves facing calls for a price cut instead.”

 Who’s the cheapest?

Best buys:


Plan Name


EDF Energy

Blue +Price Promise September 2013



Online Energy Saver 19


Sainsbury’s Energy


Online Price Freeze June 2013 (MDD)



Bill Saver August 2013


Ovo Energy

New Energy Fixed*



SaveOnline 12


British Gas

Online Variable Aug 2013



iSave Dual Fuel V11



Fixed Discount April 2014 (with paperless billing)




Based on a medium user consuming 3,300kWh electricity and 16,500kWh gas with bill sizes averaged across all regions. *Not available in Scottish-Hydro region.

See also:

Energy price rises… who’s gone up and who’s gone down – see the latest energy price changes.