December, 2023
The UK’s vitality regulator, Ofgem has introduced a rise to the vitality value cap that can come into impact for invoice payers from January 1, 2024. Octopus won’t improve standing expenses for Versatile Octopus clients.
What’s the vitality value cap?
The worth cap limits the quantity an vitality provider can cost for items of gasoline and electrical energy.
It’s usually communicated as an annual determine primarily based on the ‘typical consumption’ of a dual-fuel family that pays for his or her vitality payments by direct debit. Prospects’ precise invoice quantity will rely upon how a lot vitality they use, so those that use extra, can pay extra.
What did the announcement say?
On the first January the Ofgem value cap will improve from £1,834 to £1,928.
Because of this the unit charge for gasoline and electrical energy that clients are charged on a normal variable tariff will likely be barely greater. Octopus standing expenses won’t be raised in January.
It is very important observe that this winter your payments may proceed to really feel excessive as the federal government has ended the Invoice Help Scheme which noticed £400 value of funds added to clients balances final winter.
When you’re struggling to pay we’ve a lot of assist on provide.
Why are unit charges rising?
We’re dedicated to truthful costs that really mirror the price of the vitality we provide to you. The wholesale vitality market has continued to be risky in 2023 and the slight improve in unit charge is because of the price of wholesale gasoline rising. This has been impacted by world occasions together with continued and escalating battle in Europe and the Center East.
What further assist is on provide?
From the federal government:
Full data will be discovered right here however we’ve included a prime line abstract beneath.
Presently, folks receiving means-tested advantages will obtain a cost of £900, pensioners will obtain £300 and people with disabilities will obtain £150 further monetary assist from the federal government.
These will likely be paid by the federal government instantly into the checking account of the recipient and never by way of vitality suppliers.
From Octopus Vitality:
When you’re fearful about paying your payments proper now, head to our devoted assist weblog.
You’ll discover detailed details about our tariffs, background information on the vitality disaster, and a hyperlink to our Monetary Help kind, which directs you to alternative ways we may help you should you’re struggling to pay – together with a £30 million Monetary Hardship fund.
What are the Versatile Octopus costs from January 1, 2024?
Your vitality 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 technique.
Versatile Octopus costs for patrons who pay by Direct Debit. You may also click on right here to obtain these costs in a PDF.
Abstract of the adjustments
- Each buyer on Versatile Octopus will see barely elevated unit charges and no improve to their standing cost.
- When you’re already in debt in your account or your funds do not appear like they are going to cowl your winter utilization primarily based on our forecast of what you’ll use, this might imply that our suggestion in your month-to-month cost goes up.
- Good to know: should you’re not paying by Direct Debit, you might save an extra £80 on common by setting one up.
Why do costs differ primarily based on location and cost technique?
It prices us extra to provide vitality 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 Worth Cap.
Managing your direct debit quantity
One of the best ways to know our recommended cost quantity is to take a look at your Steadiness Forecast. We constructed this useful instrument to point out you precisely how a lot we count on you will spend on vitality over the subsequent 12 months primarily based in your tariff costs and typical vitality consumption (which we work on primarily based on years of your meter studying information).
What if I feel Octopus’ cost suggestion is unsuitable? You possibly can change your individual cost on-line and by way of our app. When you attempt to set it so low that you simply’re vulnerable to falling into debt sooner or later, we simply ask that you simply communicate to us earlier than you make the change.
Desire a fast reminder of why we set your funds to a easy quantity 12 months spherical? Watch our fast explainer video:
Often Requested Questions:
Does the vitality value cap have an effect on me?
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When you’re on a variable tariff, like our Versatile Octopus, the Ofgem Worth Cap defend the value you pay.
The worth cap particularly applies to variable tariffs as a result of they aren’t mounted towards the volatility within the vitality markets. Totally different suppliers can refer to those tariffs in numerous methods; commonplace variable tariff (SVT), non-fixed, and so on. At Octopus our variable vitality tariff is named Versatile Octopus.
When you’d like to verify which tariff you are on, and particulars like your present costs and contract dates, you’ll be able to see them in your on-line account (scroll a bit of method down and have a look at the main points beneath your property tackle).
You possibly can learn extra in regards to the vitality value cap and whether or not it impacts you on Ofgem’s web site.
How may I get vitality £80 cheaper by paying by Direct Debit?
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Our Versatile tariff may have barely completely different unit charges and standing expenses primarily based in your cost technique. The £80 isn’t a flat low cost for Direct Debit clients (or a cost on non-Direct Debit clients) – it’s the everyday financial savings a mean dwelling may see over a 12 months on the cheaper Direct Debit charges.
When you change the way you pay, our system will decide that up and regulate your charges routinely, so should you don’t have a Direct Debit proper now, it’s tremendous simple to entry the most affordable costs. All it is advisable do is about up a Direct Debit on-line and we’ll do the remainder.
Why are tariffs generally cheaper if I pay by Direct Debit?
Not having a Direct Debit (and as an alternative paying on receipt of your invoice) prices us much more in admin.
We do not assume it is truthful to make everybody cowl that additional 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.
We run an extremely environment friendly enterprise, which implies you’ll nonetheless get an ideal value should you select to pay a distinct method – round £130 cheaper than the April Worth Cap.
Is the £1,928 determine from Ofgem the utmost value I pays for vitality?
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No: this determine will not be absolutely the most a buyer may pay.
When you’re affected by the value cap, the safety you obtain is relative to how a lot vitality you employ.
Ofgem calculates the value cap primarily based on the yearly utilization of a typical medium consumption dwelling (that is 2700 kWh of electrical energy and 11500 kWh gasoline per 12 months). It represents the utmost quantity Ofgem considers truthful for vitality suppliers to cost clients on variable tariffs.
This determine is utilized by suppliers to use the value caps safety towards every buyer’s precise utilization. Put merely: should you use extra – or much less – vitality than that typical dwelling, your individual yearly vitality prices on a tariff priced on the most charges could also be greater – or decrease – than that £1,928 determine from Ofgem.
What does a change in Typical Home Consumption imply.
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Ofgem has not too long ago lowered the ‘typical home consumption values’, in different phrases, how a lot they estimate a mean family makes use of in vitality per 12 months. It’s because households within the UK have lowered their vitality utilization over the previous 12 months and this has impacted the ‘common’ quantity a family makes use of and subsequently how a lot they pay on their vitality payments. Because of this the value cap appears prefer it has fallen extra considerably because it takes right into a account a fall in common vitality utilization in addition to a fall in unit charge. You possibly can learn extra right here.
What are the precise most unit charges and standing expenses of the vitality value cap?
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The worth cap units a most charge for:
- Vitality items: the value suppliers can cost variable tariff clients per unit of gasoline and electrical energy you employ
- 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 on.
Ofgem have shared that on common – for patrons paying by direct debit – the unit charges will likely be:
Electrical:
- 28.62 p / kWh unit
- 53.35 p / day standing cost
Fuel:
- 7.42 p / kWh unit
- 29.60 p / day standing cost
Essential: these are averaged figures from throughout all areas within the UK. As sure prices differ, 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 Economic system 7 tariffs (which have a day and an evening value) and prepayment meters.
Extra data on different cost strategies will likely be added to this web page because it turns into out there.
Why do excessive gasoline costs have an effect on a 100% renewable vitality tariff?
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Although inexperienced vitality is cheaper to generate, available on the market it is offered on the identical, greater value of gasoline and different fossil fuels. That is right down to the way in which the market’s arrange. It is just like how homes are offered primarily based on the value of neighbouring houses, moderately 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 vitality wants (or ‘demand’) matched completely with an equal quantity of energy provide. The grid calls on all various kinds of energy, from gasoline to renewables, to assist with its essential balancing job.
It would not be totally truthful to pay some vitality mills much less for his or her energy once they’re fulfilling the identical vital operate. Because of this the best value finally ends up setting the market value. When gasoline costs are excessive, all electrical energy costs are too.
We’re pushing for a system wherein 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 vitality wants in any respect.
I’m on a set tariff proper now, what occurs when it ends?
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When you’re on a set tariff, the very first thing to know is that the value cap doesn’t have an effect on your present vitality contract.
We’ll at all times e mail you prematurely of your mounted tariff coming to an finish.
When you’d like to verify your present costs and contract dates, you’ll be able to see them in your on-line account (scroll a bit of method down and have a look at the main points beneath your property tackle) or on any PDF vitality assertion. It’s normally on the second web page, close to the highest of the breakdown in your electrical energy and / or gasoline expenses for the interval.
