The firm will offer a fixed 12-month tariff of £2,275 for existing customers, which is less than the government’s limit of typical household bills of £2,500. This move comes as wholesale gas prices are falling and start to impact bills. Ovo Energy announced that it is launching the tariff because customers want “the security of a long term fix to protect them against the continuing energy price uncertainty”.

However, money expert Mr Martin Lewis, from MoneySavingExpert, has urged caution on Ovo’s deal, warning that there may be even cheaper deals in the months to come. He advises people not to just jump on a fix because it costs less than they’re paying now. Mr Lewis points out that, because wholesale rates have dropped, the price cap will probably fall, meaning that customers could be paying 20% lower rates than they are now. He also predicts that the price will likely stay around that level until the end of the year and into early 2024.

With the latest UK budget and falling gas prices, industry commentators have been predicting that household bills will drop this summer as energy suppliers make new long-term deals to buy cheaper gas. This expectation likely means that the government’s Energy Price Guarantee (EPG), which is being held at its current levels until the end of June, will no longer be needed. Analysts at Cornwall Insight anticipate that Ofgem’s energy price cap, which usually limits what suppliers can charge per unit of energy, will fall to £2,153 a year from July.

Financial firm Investec suggests that the cap could decrease even more and go down to £1,981 a year from July, although this figure would still be significantly higher than it was before Russia’s invasion of Ukraine. Experts believe that households might be able to shop around for more competitive energy deals at this point.