Why the new Energy Price Cap won't affect Octopus Energy

You might’ve read last week that some energy prices will fall this winter as Ofgem adjusts its energy price cap to reflect lower wholesale prices. This means that around 11 million households will see an average of £75 slashed from their yearly bills.

It’s great news, and shows the cap doing what it’s supposed to – protecting the UK’s most vulnerable households from rip-off default tariffs. 

First things first. The new price cap won’t affect any Octopus Energy customers. Here’s why.

Our prices have always been well below the cap. Our mission is to make energy transparent, and fair. If we’ll be paying less for energy, you should be too – meaning customers on our variable tariff got a price drop when we saw lower wholesale prices back in April.

This practice is why we campaigned hard for the price cap to be introduced in the first place. We rallied support around the price cap bill with politicians from across the spectrum, and raised public awareness through a new, ‘long term savings’-focused price comparison site (every.energy), and a secret stunt in a pub. Greg even spoke before Parliament, advising the Bill Select Committee on the price cap. All to build a level playing field and guarantee that, whoever your supplier, you’ll benefit from fairer, more transparent pricing.

So we’re obviously really happy that the price cap became law.

There’s just one problem: it doesn’t go nearly far enough.

When we founded Octopus Energy three years ago, our mission was simple. To use the latest tech and the best customer service to deliver energy that was renewable, transparently priced and always great value. 

So what’s the problem with the price cap? Well, for one thing, if you are a Big 6 customer and you get a price cut, that means that even the Government recognises you’re being overcharged. And it shouldn’t take the Government to step in to cry foul when you’re being ripped off.

And the other problem is that the price cap does nothing to stop cynical companies from using what we call “tease and squeeze” tactics. That is to say, they’ll lure you in on a loss-leading (often unsustainable) introductory offer to make sure they come up as “cheapest” on price comparison sites – then move you on to a Standard Variable Tariff (SVT) when your fixed term runs out. The price cap indicates a maximum amount these variable tariffs can be. But the problem is, big suppliers will set their prices to the legal maximum, whatever that is, rather than trying to pass savings onto their customers or build a more efficient business. We saw this happen in April, when the capped amount went up. One by one, within the space of a week, every Big 6 supplier put its price up to the capped amount. 

Ultimately, the cap is a really important protection for consumers on the most over-priced tariffs – often the most vulnerable households, who don’t have time to constantly review their utility providers to make sure they’re getting the best deal. 

But do you really want to use a company that has to be legally restrained from ripping you off? That consistently sets its prices as high as it's legally allowed to, instead of just running a more efficient business?

We are always good value. We pass savings on to our customers when prices drop. Not because the Government tells us to. But simply because it’s the right thing to do.

It’s an approach that has seen us grow from zero customers when we set out to more than 800,000 today – and we’ll soon pass the million milestone. Thanks to our transparency and focus on customers, we’ve been named the only Which? Recommended Provider for the second year running. We’re proud of that. And we’ve been voted Best UK Company to Work For because we value our people, too.

Legacy suppliers can’t match us on price, and instead, want customers to pay for their inefficiency. With big changes underway in the government, and lobbyists working hard to see price cap regulation reversed, the future for the energy price cap is uncertain.

We won’t change our approach to the price cap, because we run an efficient, fair business that doesn’t rely on rip-off prices. We can promise you that. Plus, with constant tech iteration and innovation, we’re always finding new ways to bring better value to you and cleaner energy for the planet.