Fixed or variable ?

dizzylizzy55

My contract with OVO is due for renewal and I don't know whether I should go wioth a fixed or variable contract ? Any suggestions ?

System

Hi. Forgive me, but what is the reason for your question? A variable tariff with Ovo will cost you more than a fixed. Fixed tariffs have no exit fees but you cannot tariff hop without paying £30 per fuel The variable tariff does allow you to switch to an Ovo fixed tariff without penalty.

Edit.

I have just checked my projected usage. I am with OVo Better Energy Fixed at £717 per annum. Moving to a variable Ovo tariff would cost me an extra £112 per year.

modsandmockers

Lizzy - the difference between a fixed tariff and a standard (variable) tariff is the price and, these days, the variable tariff is usually the more expensive. But the standard tariffs are, by definition, variable, and so it is possible for the variable prices to fall below the level of the fixed prices.

Until recently, energy prices only ever went in one direction (up!), and so the energy suppliers would offer their customers the option to fix their energy prices for a fixed period of time in order to avoid the unpredictable price rises. The downside was that you had to take a bit of a gamble because you had to pay a premium for being able to fix the price for a specified period of time - and if by chance energy prices were to fall, then you would also have to pay a penalty (exit fee) in order to switch and take advantage of the new lower ‘standard’ prices.

But right now energy prices are tending to move downwards with the result that fixed price tariffs (which are based on predicted future prices of the raw materials) are mostly cheaper than the standard variable tariffs. This effectively renders the whole idea of fixed tariffs redundant, and it is now very easy to find a fixed price tariff with no exit fee.

So, at the moment, the answer to your question is almost certainly that a ‘fixed’ tariff will be cheaper and that, if prices fall further, you will stand a chance of being able to switch to an even cheaper tariff without paying a penalty (check the t&c’s)

Bear in mind that the prices of a fixed tariff are linked to the duration of the fix - until recently, you would pay significantly more for an 18-month fix than for a 10-month fix. But, right now, the longest fixes are only a little bit more expensive than the shortest and, if there is no exit fee, then you have a certain amount of freedom to change your mind if energy prices continue to fall.

System

Just to be clear, Ovo does not have any tariff exit fees. However, unlike many other companies, Ovo does not permit fixed contract tariff switches. You either have to pay £30 per fuel to switch fixed tariffs or switch and stay away for a minimum of 3 months. The cheapest supplier for me st the moment is the MSE Collective Switch with E.oN. E.oN does have a £30 per fuel contract exit fee but it will allow you to change fixed tariffs without penalty.

footyguy

dizzylizzy55 wrote: »

My contract with OVO is due for renewal and I don't know whether I should go wioth a fixed or variable contract ? Any suggestions ?

What's the difference in price, and by how much?

Which way do you think prices may move in the future, and by how much?

Presumably you have had a fixed tariff in the past with Ovo; what's different this time?

But it's your money to spend as you wish...