Independent energy provider OVO Energy has unveiled their Cheaper Energy Fixed tariff that offers users an astonishing average annual bill of less than £1,000.
The news marks the first occasion that an average annual energy bill has been estimated to be below £1,000, with OVO estimating that a consumer would have to part with just £998.09 in order to obtain their household fuel provisions for a year.
They identified that they had decreased their prices for a fifth time in the past 6 months as wholesale prices had dropped by 9.5%, meaning that they were in a position to pass the savings onto their customers. Their new fixed rate tariff is far cheaper than the industry average that exceeds £1,200, and is thought to be the first in a series of new tariffs set to release by smaller suppliers in order to encourage consumers to switch to their services.
Currently, over 95% of the UKís energy is provided for by the ëbig sixí- SSE, British Gas, Npower, E.ON, EDF and Scottish Power, and the government are keen on encouraging people to switch in order to naturally bring prices down through the introduction of greater levels of competition within the industry.
Stephen Fitzpatrick, founder of OVO Energy argued that the cost of energy from the company illustrates the “actual cost of doing business”, and called for other providers to mirror their conduct and pass on savings whenever it is possible to do so.
He said: “Transparent pricing will help consumers to trust the energy market again. That means when wholesale prices fall, customers shouldn’t see prices being frozen, they should see them falling.”
OVO is not the only small energy provider to have unveiled a relatively cheap market offering for consumers to acquire.
Both Flow Energy and First Utility have followed suit, unveiling tariffs that would cost the average consumer £1,010.08 and £1,013.49 respectively. The Thames Online Fixed September 2015 and iSave Fixed v18 May 2015 have both captured a widespread degree of attention, with both coming at a low cost and only committing users to one year.
Recent research conducted on the industry illustrated that people are starting to switching supplier far more than previously, with switching levels to providers outside the big six rising by 56% last year. This contrasts with previous allegations that a number of the countryís small providers were set for closure due to an inability to compete with the ëbig sixí.
If you are currently looking to reduce your daily and monthly expenditure, then comparing online for commodities such as gas and electricity provisions is an excellent way of bringing these costs down, both in the short term and the long term.
The immediate benefits that you stand to acquire by comparing are that you will be able to find the tariff best suited to your circumstances and will be able to identify the lowest costs for your area. Considering the disparity between the industry average on annual bills and OVOís average cost for their new tariff, it can be argued that you stand to save a wealth of money by simply going online and assessing which tariff to sign up for.
The long term effects of comparing online is that prices should fall from an increased amount of competition in the industry, which has been much needed for some time now. The reality is that with switching levels on the rise, suppliers will be compelled to release cheaper and more consumer orientated tariffs, and this manifesting in reality would see the industry as a whole giving energy provisions at a lower cost, rather than raising continually as previously.
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