Energy provider Ovo cancels price rise for its customers
The small power company, Ovo Energy, has cancelled a planned price hike for some of its customers because of a fall in wholesale gas prices.
Ovo had scheduled in a rise of 3.5% for 10,000 of its customers, who are on the company's variable rate tariff. The price hike was set to kick in on 1 January 2012.
The Gloucestershire-based company announced the hike on 26 October but since then prices of gas have fallen and so Ovo has decided not to go ahead.
With just 69,000 customers in the UK, Ovo is small compared to the 'Big Six' energy providers.
Consumer groups have welcomed its decision.
Throwing down the gauntlet
Audrey Gallacher, director of energy at Consumer Focus, says: "This is a good sign and it throws down a gauntlet to the Big Six. Wholesale prices have been falling recently, and all suppliers should be looking at whether that provides an opportunity to bring prices down.
"A smaller supplier such as Ovo may be able to react more quickly, but it obviously can't operate on the same economies of scale as its much larger rivals. If it can cancel price rises because market fundamentals change, it begs the question why can't others? When wholesale prices fall, you would expect companies fighting in a truly competitive market to start cutting bills."
Although all the main players have pushed up their prices there is still some variation in the market. For example, a standard dual fuel plan from British Gas would cost you £1,219 while First Utility offer a similar plan for £1,032.
But despite the difference, consumers are still unwilling to switch providers to get a better deal and last year only two in 10 households switched.
Changing provider saves the average bill payer £254, according to uswitch.com, and by looking at the whole of the market, and not just the largest providers, you could be able to save money.