Replace: March 2024
The UK’s power regulator, Ofgem has introduced a lower to the power worth cap that can come into impact for invoice payers from April 1, 2024.
Octopus are the one main provider pricing considerably beneath the cap.
What’s the power worth cap?
The worth cap limits the quantity an power provider can cost for items of gasoline and electrical energy. It additionally impacts the standing cost which is the each day price per gasoline kind and is ready by Ofgem.
The worth cap is commonly communicated as an annual determine based mostly on the ‘typical consumption’ of a dual-fuel family that pays for his or her power payments by direct debit. Prospects’ precise invoice quantity will rely upon how a lot power they use, so those that use extra, pays extra.
What did the announcement say?
On the first April the Ofgem worth cap will lower from £1,928 to £1,690.
Which means the unit charge for gasoline and electrical energy that clients are charged on a regular variable tariff shall be round 14% decrease for electrical energy and 19% decrease for gasoline. Standing expenses have been elevated however Octopus will preserve our clients standing expenses beneath the value cap, in contrast to different giant suppliers.
For those who’re struggling to pay now we have a number of help on provide.
Why are standing expenses growing?
Power firms don’t select the standing cost prices, these are set by Ofgem and canopy the price of supplying power to your property. You could find out a bit extra about standing expenses right here.
At Octopus, we might favor to see standing cost prices moved into unit charge in order that clients have extra management over their power invoice prices, it will require coverage reform which we’re preventing for.
What extra help is on provide?
For those who’re anxious about paying your payments proper now, head to our devoted help weblog or give us a name.
You’ll discover detailed details about our tariffs, background data on the power disaster, and a hyperlink to our Monetary Help kind, which directs you to alternative ways we might help you when you’re struggling to pay – together with a £30 million Monetary Hardship fund.
What are the Versatile Octopus costs from April 1, 2024?
Abstract of the modifications
- Most clients on Versatile Octopus will see decreased unit charges and a rise to their standing cost, prepayment clients will see a lower to their standing expenses.
- For those who’re already in debt in your account or your funds do not appear like they may cowl your utilization based mostly on our forecast, this might imply that our advice on your month-to-month cost goes up.
- Good to know: when you’re not paying by Direct Debit, you could possibly save an extra £80 on common by setting one up with us.
Your power costs rely upon the place you reside, and the way you select to pay. Under, we have included a breakdown of all Versatile Octopus charges and expenses by area and cost methodology.
Versatile Octopus costs for purchasers who pay by Direct Debit. You can even click on right here to obtain these costs in a PDF.
Why do costs fluctuate based mostly on location and cost methodology?
It prices us extra to produce power to some areas relying on issues like proximity to mills, price of sustaining native networks and extra.
The identical is true with completely different cost strategies – for instance, it prices suppliers extra to manage and handle accounts that do not pay by Direct Debit, so Ofgem components that into their Value Cap.
Managing your direct debit quantity
One of the best ways to know our advised cost quantity is to have a look at your Stability Forecast. We constructed this helpful device to point out you precisely how a lot we count on you may spend on power over the subsequent yr based mostly in your tariff costs and typical power consumption (which we work out based mostly on years of your meter studying knowledge).
What if I believe Octopus’ cost suggestion is flawed? You may change your personal cost on-line and by way of our app. In case you are already in debt and attempt to scale back your direct debit we advocate you give us a name and we can provide you a hand.
Desire a fast reminder of why we set your funds to a easy quantity yr spherical? Watch our fast explainer video:
Continuously Requested Questions:
Does the power worth cap have an effect on me?
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For those who’re on a variable tariff, like our Versatile Octopus, the Ofgem Value Cap protects the value you pay.
The worth cap particularly applies to variable tariffs as a result of they aren’t fastened in opposition to the volatility within the power markets. Completely different suppliers can refer to those tariffs in a lot of methods; commonplace variable tariff (SVT), non-fixed, and so forth. At Octopus our variable power tariff known as Versatile Octopus.
For those who’d like to verify which tariff you are on, and particulars like your present costs and contract dates, you may see them in your on-line account (scroll just a little means down and have a look at the small print beneath your property deal with).
You may learn extra concerning the power worth cap and whether or not it impacts you on Ofgem’s web site.
How might I get power £80 cheaper by paying by Direct Debit?
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Our Versatile tariff may have barely completely different unit charges and standing expenses based mostly in your cost methodology. The £80 isn’t a flat low cost for Direct Debit clients (or a cost on non-Direct Debit clients) – it’s the standard financial savings a median dwelling might see over a yr on the cheaper Direct Debit dual-fuel charges.
For those who change the way you pay, our system will choose that up and modify your charges routinely, so when you don’t have a Direct Debit proper now, it’s tremendous straightforward to entry the most affordable costs. All you could do is ready up a Direct Debit on-line and we’ll do the remaining.
Why are tariffs generally cheaper if I pay by Direct Debit?
Not having a Direct Debit prices us much more in admin.
We do not suppose it is truthful to make everybody cowl that further price, so we do provide a less expensive charge for many who select to pay by Direct Debit, which prices us much less to handle.
Is the £1,690 determine from Ofgem the utmost worth I’ll pay for power?
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No: this determine is just not absolutely the most a buyer might pay.
For those who’re affected by the value cap, the safety you obtain is relative to how a lot power you utilize.
Ofgem calculates the value cap based mostly on the yearly utilization of a typical medium consumption dwelling (that is 2,700 kWh of electrical energy and 11,500 kWh gasoline per yr). It represents the utmost quantity Ofgem considers truthful for power suppliers to cost clients on variable tariffs.
This determine is utilized by suppliers to use the value caps safety in opposition to every buyer’s precise utilization. Put merely: when you use extra – or much less – power than that typical dwelling, your personal yearly power prices on a tariff priced on the most charges could also be larger – or decrease – than that £1,690 determine from Ofgem.
What are the precise most unit charges and standing expenses of the power worth cap?
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The worth cap units a most charge for:
- Power items: the value suppliers can cost variable tariff clients per unit of gasoline and electrical energy you utilize
- Each day standing expenses: the value suppliers can cost per day for ongoing prices, like paying the businesses who handle distribution networks, working prices, and so forth.
Ofgem have shared that on common – for purchasers paying by direct debit – the unit charges shall be:
Electrical:
- 24.50 p / kWh unit
- 60.10 p / day standing cost
Gasoline:
- 6.04 p / kWh unit
- 31.43 p / day standing cost
Vital: these are averaged figures from throughout all areas within the UK. As sure prices fluctuate, e.g. what transmission community charges we pay in an space, the precise most unit charge varies relying on area. There are different components too: completely different most charges for Financial system 7 tariffs (which have a day and an evening worth) and prepayment meters.
Extra info on different cost strategies shall be added to this web page because it turns into accessible.
Why do excessive gasoline costs have an effect on a 100% renewable power tariff?
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Although inexperienced power is cheaper to generate, available on the market it is offered on the identical, larger worth of gasoline and different fossil fuels. That is right down to the way in which the market’s arrange. It is much like how homes are offered based mostly on the value of neighbouring houses, reasonably than what it prices to construct.
It is primarily arrange this fashion as a result of the grid at all times needs to be balanced: the UK’s power wants (or ‘demand’) matched completely with an equal quantity of energy provide. The grid calls on all several types of energy, from gasoline to renewables, to assist with its essential balancing job.
It would not be fully truthful to pay some power mills much less for his or her energy after they’re fulfilling the identical necessary operate. Which means the very best worth finally ends up setting the market worth. When gasoline costs are excessive, all electrical energy costs are too.
We’re pushing for a system by which increasingly of the electrons are inexperienced ones – as a result of the extra inexperienced energy within the grid, the much less we have to depend on costly, soiled gasoline imports to satisfy our power wants in any respect.
I’m on a hard and fast tariff proper now, what occurs when it ends?
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For those who’re on a hard and fast tariff, the very first thing to know is that the value cap doesn’t have an effect on your present power contract.
We’ll at all times electronic mail you prematurely of your fastened tariff coming to an finish.
For those who’d like to verify your present costs and contract dates, you may see them in your on-line account (scroll just a little means down and have a look at the small print beneath your property deal with) or on any PDF power assertion. It’s normally on the second web page, close to the highest of the breakdown on your electrical energy and / or gasoline expenses for the interval.
