Ovo launches first energy deal cheaper than Government price cap
One of Britain’s biggest energy providers has offered its first deal cheaper than the Government’s bill guarantee.
Ovo Energy, which has 4.5million customers, has launched a fixed 12-month tariff at £2,275.
The offer is £225 less than the Government’s Energy Price Guarantee (EPG), which caps the cost of a typical household’s annual energy bill at £2,500.
Providers are beginning to offer deals below the EPG after sustained falls in the price of gas.
Wholesale gas prices have dropped by more than 80 per cent since their peak last August, though they are still roughly triple what they were before the energy crisis began.
Natural gas is used to set the price of electricity, which is why it has pushed up all bills. Up until now, falling gas prices have brought no material fall in household bills because costs were still above the EPG, meaning only the Government benefited from falling prices.
However, experts have said that average bills will soon fall below the EPG, unlocking savings for both families and the Government.
Martin Lewis, from MoneySavingExpert, told the BBC: "People need to be very careful not to just jump on a fix because it costs less than they’re paying right now.
"After that, because wholesale rates - the rates energy firms pay - have dropped, it’s likely the price cap will drop, and on current predictions that means you’ll start paying 20% lower rates than now."