Ovo Energy has announced that it is increasing its prices, moving the cost of its cheapest plan, New Energy Fixed, up from £1,172 a year to £1,240, a £68 or 5.8% increase with immediate effect for new customers.
However, existing customers will also see their prices increase by 6.5% on the 20th May.
It is the second small supplier to announce a price rise this year, following Co-op Energy’s announcement this week that its prices were to increase by 8.7% on the 9th May, which will take its average dual fuel bill up to £1,258 a year.
At the time of the announcement, Co-op Energy blamed increasing costs and smaller suppliers are typically more vulnerable to fluctuations in the wholesale market. However, this often means that they are able to regularly pass on the benefits of a reduction in wholesale costs – something the big six energy suppliers often say they are unable to do.
The price of wholesale gas recently escalated following an extended British winter and the coldest March for 50 years which has resulted in a strain on gas resources.
Experts have warned that UK households could expect to see an increase in their energy bills as a result. Predictions of a price rise have been backed by two of Britain’s largest energy suppliers; E.ON and British Gas.
‘Blow to consumers’
Tom Lyon, energy expert at uSwitch, warned of the impending impact on consumers:“The fact that smaller suppliers are increasing their prices is not just a blow to their own customers, but a warning to consumers generally that price hikes are back on the agenda.
“Higher wholesale prices translate into higher household bills – unfortunately for consumers it’s rapidly turning into a question of when rather than if.
“There is some small consolation in that suppliers are increasingly bringing out attractive longer-term fixed price plans. Yes, this indicates the direction in which they believe prices are going to go, but it also gives consumers an opportunity to protect themselves against price hikes for anything up to three winters.
“With many households struggling to afford their bills, this pricing certainty could be a blessing.
“With the average household energy bill already an eye-watering £1,353 a year, it’s also important that consumers now take action to reduce the cost of their bills. There are two simple steps to doing this – use less energy by making our homes more energy efficient, perhaps by taking advantage of the Green Deal, and paying less for the energy we do use by switching to the most competitive tariff for our needs.”