Ovo Energy, an independent energy company with 70,000 customers, has cut its dual-fuel fixed-tariff prices by 5pc in response to falling wholesale prices.
The company claimed that the new lower tariff, available from today, would make an average household’s annual energy bill £133 cheaper than under comparable tariffs offered by the “Big Six” largest energy suppliers.
Ovo’s reduced tariff will be available only to new customers, or to existing customers as they renew their contracts.
The company is the second small supplier to cut prices this winter, after Co-operative Energy announced in December an average 3pc cut, to come into effect in February.
The moves place further pressure on the Big Six, who have faced criticism failing to cut bills as wholesale prices fall.
The big suppliers have argued that they are unable to pass on reductions so quickly because they have to buy more of their energy at futures prices to guarantee supplies, while small companies which tend to buy at spot prices can react more easily to market fluctuations.
About 60,000 of Ovo’s customers are on its fixed-price tariffs and most of those are on its ‘New Energy’ tariff, under which 15pc of the energy is from renewable sources.
Under the new pricing, an average bill on the New Energy tariff would be £1,061 per year, a 4.9pc or £54.85 reduction on the current price, while an average bill under comparable tariffs from the Big Six suppliers was £1,194, the company said. It said that average bills for its 100pc renewable ‘Green Energy’ tariff would fall 5pc, to £1,110.
Audrey Gallacher, director of energy at Consumer Focus, said: “Customers will be glad to see that Ovo has reflected falling wholesale costs in the prices they are asked to pay. This is a market fundamental which must be reflected across the sector if wholesale costs continue to fall. The gap between wholesale and retail prices remains a fault line for consumer confidence in the energy market.”
“The average customer bill is up by 14pc since last summer, leaving many household budgets increasingly stretched.