Not a friend, but not a villain either

I am forced to admit that the cost-predictions of my energy company, OVO Energy, are not after all outrageous. I thought they were, and that their constant nagging to increase my monthly direct debit was unjustified. But I was wrong.

In the end, I worked out my own prediction of what my electricity and gas costs, plus VAT, would be. I had the spreadsheet records, based on past bills, to do it with. It was easy to look at these and make good estimates of what my electricity and gas consumption would be for the current Billing Year that began on 15th January 2023 and will end on 14th January 2024. Really, I don't know why I didn't carry out this exercise before. It brought clarity, and revealed just how expensive my energy costs will be until early next year.  

This then is my calculation for the current Billing Year from 15th January 2023 to 14th January 2024, using my own best estimates:

Electricity

Consumption: 1,550 kWh @ average price for the Billing Year of £0.3500 per kWh: £542

Standing charge: 365 days @ average charge per day for the Billing Year of £0.4200: £153

Total for electricity: £695

Gas

Consumption: 21,000 kWh @ average price for the Billing Year of £0.1100 per kWh: £2,310

Standing charge: 365 days @ average charge per day for the Billing Year of £0.3000: £110

Total for gas: £2,420

Total for both electricity and gas: £3,115

VAT @ 5%: £156

Grand total: £3,271

Readers might well be puzzled by my energy consumption estimates. But I am not a typical energy customer. I live on my own. I use only a few basic electrical appliances and gadgets. Only the fridge and freezer are constantly switched on. The washing machine does just two washes per week. I have a microwave oven, but never use it. There is of course a kettle, but no dishwasher, tumble drier, food mixer or coffee machine. The TV is always on standby, but not regularly watched. I do have an electric shower. 

Gas is a different story. When at home, I use a lot for cooking - I cook many things in the gas oven. I don't deny myself proper heating, for health reasons as well as for comfort. Better loft insulation would of course help. That's an important long-term aim. But I need to clear out the loft first - several days' work. And only when I feel up to making the effort, and if I have somewhere to put all the stuff removed. (I'll have to hire a big skip)

OVO tell me that most households use a lot more electricity than I do, and much less gas. Until now I believed their usage predictions were based on what a typical family in a typical house would use, which is why I hadn't been taking their cost predictions seriously. But in fact their costing model turns out to be personalised to me. Thus it was that until a week ago they were insisting that, according to their prediction, the energy cost for the current Billing Year would be around £3,260. That seemed high, and I didn't believe them at first. But I now see that their prediction was very close to my own prediction of £3,271. As soon as I realised this, I raised the direct debit to what they were asking for: £244 a month. 

Now, in the last few days, their prediction for the Billing Year has edged up by £200 to around £3,460. 

I don't know precisely why this should be so, but perhaps it's the combined effect of Ofgem's price cap changing (just confirmed) and the general withdrawal of government help for households (likely to go ahead). Anyway, they now say I should increase my monthly direct debit yet again, from £244 to £274. Or else top up my credit balance by £350. Either will - on my prediction - result in an end-of-Billing-Year credit balance of £200. I've paid the £350 top-up. I don't mind ending the year in credit - it'll stop OVO nagging me, and go to reduce the next Billing Year's monthly payments.

So I've made a truce with OVO. They came in and took over from SSE without my say-so, and appeared at first to be unreasonably heavy-handed with their direct debit demands. But I now understand their ways better. Certainly, towards the end of last year, they were reasonable enough to give me a refund and let me reduce my direct debit for a while - even though with hindsight I can see that I ought to have let things be. The £350 top-up has put me back to roughly how it would have been without the refund, and without the temporary reduction in monthly payments. 

No energy company is ever going to be a warm-hearted friend. But I feel now that OVO is at least not a villain, and (for now) can be trusted. That doesn't alter the wider picture, that energy prices have become dreadfully high and are likely to stay high henceforth. 

I am going to consider a suitable fixed-price plan, from OVO or someone else, as soon as a good choice becomes available again. I will gain monthly cost stability. But such plans may be a long time coming, and may cost too much. I rather think that staying with the default variable-rate tariff will be the best option for some time to come.