OVO announces major change that will help save households money on energy bills

05 September 2023 , 11:43

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OVO will not be increasing its standing charge when the price cap changes in October (Image: SOPA Images/LightRocket via Getty Images)

OVO Energy will not be passing on the standing charge increase to its customers when the price cap changes in October.

The energy company announced today that it was not going to increase its standing charge in line with the Ofgem price cap. Standing charges are a fixed daily amount you have to pay for energy, no matter how much you use. It is used to pay for things such as the upkeep of the electricity and gas grids.

Last month, the energy regulator Ofgem announced its October price cap which is falling from £2,074 a year to £1,923 for a typical dual fuel household paying by direct debit. This means the average energy bill will drop by £151 a year. However, the regulator also announced that its standing charge will be rising.

The unit rate for electricity for direct debit customers will fall from 30.11p per kilowatt hour (kWh) to 27.35p but the standing charge is rising from 52.97p per day to 53.37p. The unit rate for gas for direct debit customers will drop from 7.51p per kWh to 6.89p with the standing charge increasing from 29.11p per day to 29.62p.

OVO says the standing charge alone will cost all households around £300 this year regardless of how much energy they use. The energy firm has also called for the standing charge to be scrapped altogether for households who need the most support this winter.

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Raman Bhatia, CEO of OVO, said: “Energy bills are set to stay high despite the recent price cap reduction. This leaves many households with stretched finances struggling to pay. We are calling for a reform of the unpopular standing charge and a social tariff for the most financially vulnerable. Our own Customer Support Package that will provide immediate support to our customers who need it most right now. By working with partners like StepChange we can continue to directly help people facing hardship this winter and beyond.”

This year OVO Energy has launched its "extensive" support package for vulnerable customers which will be open for applications from October. OVO has invested £40million in the package which will see it not enforce prepayment meters until March next year and will provide emergency top-up credit or temporary payment reductions to eligible customers.

The package also includes £1million worth of free, energy saving products that help households stay warm and reduce their energy consumption, such as electric blankets and mattress toppers, draught excluders, LED bulbs and SMART sockets. OVO will also provide £500,000 in funding to support key charities including StepChange and Trussell Trust.

Ruby Flanagan