The fuel price rise, which will hit more than 10,000 customers with immediate effect, more than reverses January's cut

Ovo Energy has announced it will be increasing its dual fuel fixed tariff prices by 7.7% with immediate effect, more than reversing a cut made in January.

The increase means an average household will now pay £1,139.85 a year for the New Energy dual fuel tariff, compared with £1,061 in January – an increase of more than £78.

It will affect new customers and those whose existing fixed rate Ovo deals are coming to an end. Charges for electricity-only customers have also risen by an average of 3%, while those paying one of Ovo's two variable rate dual fuel tariffs will see prices rise by 6.2% on 3 May. Ovo has 10,000 variable rate customers out of a total of about 90,000, but is not offering a variable rate tariff to new customers.

Stephen Fitzpatrick, Ovo Energy's managing director, said the company's higher prices were still lower than the average £1,160 charged on comparable tariffs offered by the "big six" providers.

He said: "We work hard to make sure that our prices are as low as possible and we pass on savings whenever we can. We were the first energy company to do so this winter, cutting our two dual fuel fixed tariffs by 5%. We delayed the need for an increase for our variable rate customers for all of this winter.

"At Ovo Energy we buy our energy a year in advance, and due to recent sustained increases in wholesale prices, our prices now need to go up. Our New Energy dual fuel fixed rate tariff is still cheaper and simpler than an average of those offered by the big six.

However Tom Lyon, energy expert at uSwitch, said Ovo's increase did not mean the big six would automatically follow suit.

He said: ""There is a certain irony that while SSE is about to cut its prices at the end of March, Ovo Energy is announcing a price hike. This is going to leave a lot of consumers confused and potentially concerned that today's move heralds a general price hike. But, the fact is that this is part and parcel of the difference between small energy suppliers and the big six.

"Smaller suppliers are a lot more nimble in reflecting the changes on the wholesale market. When prices are falling, their customers benefit more quickly. The downside is that when wholesale prices go up they will normally feel this more quickly too. While the big six are perceived to be slow to pass price cuts on – hence the fact that we are still waiting for SSE's price cut at the end of March – the big six are also able to absorb the natural ups and downs of the wholesale market, which means that their customers are often shielded from price hikes for longer.

"It would be very difficult for the big six suppliers to justify a price hike based on a short-term blip in the wholesale market. Just as they haven't reacted to recent falling prices, they are unlikely to knee jerk to rising prices. The trend of higher wholesale prices needs to be sustained and consistent before consumers should really start to worry."

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