Fixing it

I'm with OVO Energy for my electricity and gas supply. Not from deliberate choice, but because back in November 2022 they absorbed SSE and I automatically became a customer of theirs. I'd already come off SSE's 2 Year fixed plan back in December 2021, moving to their standard variable tariff. This continued with OVO Energy. 

I wasn't especially keen on OVO, but after some kerfuffle I got the credit I'd built up with SSE transferred, and OVO gave me sufficient control over how much my monthly direct debit should be to make me feel content. 

Things have settled down since those first months with OVO. I've remained on their standard variable tariff, with all its ups and downs and dependence on Ofgem's price capping. The energy supply issues that rocked the market over the last couple of years have eased, and some further electricity and gas unit price reductions are expected in the summer and autumn. That said, I notice that as the unit price goes down, OVO increases its daily standing charge a bit. Doubtless to maintain profit levels. Overall, one does get a monthly cost reduction, but it isn't spectacular. In the longer term, common sense suggests that electricity and gas prices will show at least normal increases, such is the constant demand for more and more energy. And of course, ongoing trouble in the Middle East and elsewhere, affecting supply routes and spooking the market, may very rapidly drive up energy costs again. 

Another factor personal to myself is that until October 2026 I am paying almost £600 a month on Sophie's car purchase plan (HP by any other name). I need to ensure that, so far as possible, my finances remain stable and predictable, so that meeting this major commitment isn't put at risk. 

So recently I've been alert to energy cost fixes. And OVO have now emailed me about their current fixed deals. There are several. One of them, their 2 Year Fixed plan, looks attractive enough to seriously consider. 

My account with OVO runs from April each year, and I've just started the 2024/25 year paying £136 a month for electricity and gas, which on present estimates will get me to April 2025 with a small surplus. That's on OVO's standard variable tariff, which can change. Ofgem's future interventions may easily turn that small surplus into a rather large one. Maybe! But I want certainty. So today I've signed up for that 2 Year Fixed plan. The opening direct debit payments will start at the same £136 per month. I'll miss out on the expected summer or autumn price reductions; but unless my electricity and gas consumption at home radically alters, I won't be paying more until April 2026.

It's a gamble. Who knows, remaining on OVO's standard variable tariff might well have saved me money. 

On the other hand, I am now protected from any price hikes for two years ahead, and I feel those are all too likely, given the state of the world. Peace of mind and freedom from worry does have a real and substantial value. I think it's well worth avoiding energy-price anxiety if the monthly cost seems reasonable and affordable. 

I looked up what I was paying SSE for my electricity and gas in 2020, before energy prices rose dramatically. I was on another 2 Year Fixed deal, and it was costing me £115 a month. That was based on what was 'normal' pricing back in 2019, when the plan began. 

So £115 then, and now £136 in 2024. The 2024 monthly cost is 18% higher, certainly more than simple inflation would have brought about. But not outrageously higher. I'm OK with it.