Energy supplier launches sub £1,000 tariff

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, thanks to a price cut.

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 pa of gas and 3,200 kWh pa of electricity - pays £1,315 each year for their energy.

So Ovo’s deal could save the average user over £300.

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. “

SSE pledged to freeze its standard unit prices for two years until 2016 last month 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.

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.

Compare energy deals

More on energy:

The UK's worst energy provider

How to switch energy supplier

Big Six energy suppliers face competition inquiry

Energy companies told to return £400m from closed accounts