The independent energy supplier had pledged to pass on the savings after what it said was a 9.5 per cent drop in wholesale gas prices.
The annual bill of £998 is based on a dual fuel, medium user paying by direct debit. This compares to the UK average dual fuel energy bill of £1,264 per household per year.
The price drop is on Ovo’s 12 month fixed Better and Greener energy plans.
Stephen Fitzpatrick, founder and managing director, Ovo said: “Competition works.
“It is the best chance we have of bringing down bills, but we need a better market to make that possible.
“Fair, 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.
“Lower wholesale costs and recent government policy changes have meant that the cost of energy is lower now than it was 12 months ago. Bills should be too.”