Ovo Energy's announcement that it is cutting its prices by 5% or £55 a year is good news for consumers, says uSwitch.com, the independent price comparison and switching service.
The move follows its recent decision not to implement a planned price increase for variable rate customers and rival company Co-operative Energy's announcement that it is cutting its standard dual fuel prices by £35 a year]. However, the Co-op's price cut doesn't come into effect until 1st February while Ovo's is with immediate effect, allowing its customers to feel the benefit sooner.
Tom Lyon, energy expert at uSwitch.com, says: "This is the kind of consumer-friendly move we've come to expect from Ovo. In one fell swoop it has given cash-strapped consumers a lending hand, become the second cheapest energy supplier on the market and laid the gauntlet down to the big six suppliers. The fact that the Co-op had cut its prices could be shrugged off, but now that Ovo has followed suit the big six will be feeling the pressure as all eyes will now be on them.
"The move is another reminder why smaller players are so welcome in the market - they are nimble enough to be able to turn price cuts around far more quickly than the bigger players, making them a good consumer-friendly alternative. No doubt this appeal will have been further enhanced by the fact that Ovo Energy is now the second cheapest supplier on the market with an average annual bill size of £1,061. This offers an average saving of £66 a year compared with being with one of the big six, making Ovo a competitive and viable alternative. Only First:Utility, another small player, is cheaper.
"However, Ovo's price cut does not benefit all of its existing customers - those who are on a variable rate or whose current fixed rate is not up for renewal will not reap the rewards. Also the big six are not completely out of the picture - there are still some very competitive deals out there. But the fact is that prices have rocketed by £224 or 21% this year and price cuts will take some time to trickle through - households can mitigate the impact by shopping around for a cheaper deal."
Best buy energy deals:
Supplier: First: Utility
Plan Name: iSave Dual Fuel V9
Supplier: Ovo Energy
Plan Name: New Energy Fixed
Plan Name: Go Fix 10
Supplier: Scottish Power
Plan Name: Online Energy Saver 17
Plan Name: Save Online 11
Supplier: Co-Op Energy
Plan Name: Pioneer
Supplier: British Gas
Plan Name: Online Fixed
Supplier: EDF Energy
Plan Name: Price Protection 2013
Plan Name: Online Standard
Based on a medium user consuming 3,300 kWh of electricity and 16,500 kWh of gas with bill sizes averaged across all regions.
For more information visit www.uSwitch.com or call 0800 093 06 07