Energy crisis information page

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This is our Energy Crisis information hub. Here, you can find support, resources and blogs covering everything you need to know about the energy crisis: what’s driving prices up, and how Octopus is supporting customers through it (and how to access help).

Plus, answers to commonly asked questions, from how the government's Cost of Living support works to whether energy suppliers making a massive profit right now (we're not), and why renewable energy tariffs are affected by a gas crisis.

Blogs and resources

Support for Octopus customers How to access help if you're struggling to pay, from our £6 million Octo Assist fund to schemes like free electric blankets and more
Support from the Government A detailed list of the government support to help customers pay for energy – both regular yearly schemes and dedicated Cost of Living support
What happens when I have to renew my tariff? Fixed or Variable? Here's what to consider if you need to choose a new tariff when energy prices are high
An illustration of our Balance Forecast tool
Try our Balance Forecast Our new feature shows how your account balance will look over the next 12 months and lets you test out different payment amounts.
What's driving the energy crisis? The Russian invasion of Ukraine has squeezed global gas supplies, means long term gas prices are much more expensive than usual
Wondering how to save money on your bills? With prices higher than ever, quick and easy energy saving tips could save you up to £400

What are we doing to help in the energy crisis?

We're working with the government and across the energy industry, pushing for policies to spread the higher energy costs over time and give extra support to those who need it most. At the same time, we're looking after our own customers:

  • We're not making a profit right now. In fact, we never have. We’ve repeatedly cut into the very small amount we charge to cover all of our costs to keep prices as low as possible through the crisis. In normal times, we typically charge customers a slim 5% margin on top of wholesale energy to cover our business costs and reinvest in growth. In the crisis, we're not even doing that. Instead, we've absorbed £150 million of the high energy costs last year to keep them off peoples' bills.
  • We're offering loyal customers the cheapest variable tariff of any major supplier: £50 under the price cap.
  • We've got extra help for those who need it most, including a £5 million Octopus Assistance fund, giving direct support to those hit worst by rising bills.

Read on for answers to the most common-questions we've received throughout the crisis so far:

If you're struggling, please reach out to us

Get in touch to talk through all the different ways we're supporting customers through the crisis. Our £6 million Octo Assist fund has already helped tens of thousands of customers with specialised support. If you're an Octopus customer, access our financial support tool– a quick and simple online tool which asks you a series of questions about your financial situation, income and expenditure.

We can offer a number of support options based on circumstances and need, including access to existing schemes like free electric blankets, energy efficiency visits, monetary support from the fund, or a loan of a thermal imagery camera to find heat leaks at home.

Frequently asked questions:

How we can Octopus support you if you're struggling to pay?

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If you’re struggling please, please reach out. From our our Octo-Assist Fund to our electric blankets and thermal cameras, Octopus have a range of personalised options available if you need support. Visit our financial support blog for more information.

What should you do if it’s time for you to choose a new tariff?

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With energy prices still rising, your next contract is set to be more expensive than your last. To find out what you can do if the time has come to sign a new tariff, visit this dedicated blog.

Are energy suppliers like Octopus making a massive profit right now?

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No – we haven't made a profit since we've been in business, and we won't this year either. We usually reinvest any small margin we make to expand our business: either by bringing green power to more countries, or driving system change by investing in low-carbon technologies and research, or energy generation.
But throughout the crisis, we've instead put that money into helping customers even more.

Like using £150 million from our own reserves to keep bills lower by swallowing more of the high cost of power. (That's evident in our new Flexible Octopus tariff, which is £50 below the price cap for existing customers – the cheapest of any major supplier).

We've also invested in schemes like the Winter Workout, which led 250,000 customers to collectively save over £4 million in gas bills through simple tips.

And most importantly, we've focused direct support where it's most needed, with a £5 million dedicated fund to give bill relief to customers who are struggling the most to pay.

Why aren't we profiting from the high cost of energy? Because we're not an energy producer. (Well, not a major one anyway, yet: we do have two turbines with enough power for 800 homes). We buy energy wholesale, or where we can, buy it directly from UK producers: in both cases, any profit goes to those producers. Not us.

We have a renewables investment business, but we still don't own generators like wind farms directly. Thousands of investors do, so as a business we don't get this profit either.

How are Octopus weathering this crisis?

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While 21 energy suppliers have gone bust over the course of the crisis, we're not going anywhere. Our cutting edge operating model and world leading tech have allowed us to direct a millions of pounds towards supporting customers during this crisis, and safely take on customers from other bankrupt suppliers. If you want to know more, this dedicated blog can tell you exactly how Octopus is built to last.

Why can’t energy suppliers charge less?

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More than 90% of the costs of your energy bill are out of the control of your energy supplier.

The vast majority of that 90% is defined by the price of the wholesale energy we have to buy from the global market, but that 90% also includes taxes, VAT, and payments to companies who maintain the UK’s energy distribution system (the pipes and wires that transport gas and electricity).

Why would a supplier with 100% green tariffs be impacted by fossil fuels prices?

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Green electricity now costs less to generate than fossil fuel power. So shouldn't that mean green power costs less to buy on the market?

Because of the (very flawed) way the market is currently set up, sadly not, though as the grid gets greener, this should change.

The price power sells for is dictated by the going rate for all different types of energy. At the moment, the UK's outdated wholesale market has a single price for electricity every half hour (which energy suppliers need to pay) and its usually mainly determined by the cost of gas. All energy sources in the UK, from wind to solar to fossil fuels, are being sold based on the high price of gas imports – the higher price of 'brown' electrons artificially putting up the price of 'green' ones as well.

🏠 In short, It’s like selling a house; the price is set by what neighbouring homes are sold for, not the actual cost of building the house.

Renewables will make electricity a bit cheaper this year – in fact, turbines are generating so much cheaper than the current wholesale price that they're due to pay suppliers back for the extra they've earned ( £39 million up til now, but it could be lots more in the year ahead.)

We need much more renewable generation in the system, and the market should be reformed. Our CEO, Greg, talks about it more here.

Why are standing charges increasing, not just unit rates?

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Energy markets are highly regulated, so as an energy supplier we get charged certain costs for every single customer we have; even if they don't use any energy. These costs are passed on to customers via standing charges.

Costs have increased to cover expanding environmental and social schemes like Warm Home Discount - which will be available to more people this year, so costing more overall - and the ECO scheme. Plus, other things, like the administrative cost of taking over the customers of suppliers who've gone out of business, and some distribution costs moving from unit price to standing charge.

Recent regulatory changes - Ofgem's Targeted Charging Review - have increased those costs even more: which we opposed.

Our CEO Greg explains more here:

The electricity standing charge increase is driven by two changes to how much it costs us to supply your electricity. The first is the cost of failed suppliers (sadly its more than usual this year because half the retail market went bust in 2021). The industry has changed how customers are charged for using the distribution network – the cables that deliver electricity to your home. The costs of these networks have been moved from the unit charge to the standing charge.

Some of the increase in electricity standing charge is also due to the increase in the rollout of the Warm Home Discount which is set to be available to more people this year.

Gas standing charges have increased slightly, but not as much as electricity. This is because although the cost to cover failed suppliers is split nearly equally between the fuels, for gas this cost is added to the unit charge rather than the standing charge. The increase in gas standing charge is primarily due to extra Warm Home Discount costs.

Ofgem have broken down the up to date split of costs that make up a typical energy bill here

Why do standing charges vary based on where you live? It costs different amounts to get power to homes in different parts of the country. Each of the electricity distribution networks (DNOs) face different costs to maintain, upgrade and operate their networks. These costs are shared among their own customers, i.e people who live in the region where they operate.

How does the government's £400 Cost of Living support work?

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  • Every UK household will receive £400 in October 2022 to help offset their higher bills in the energy crisis. No one needs to pay that money back.
  • We don't have any more specific information about this £400 grant yet, like how it'll be paid or whether people can opt out of it. We'll update here as soon as we know.
  • There's also additional support for those hit worst by the high cost of living – low income households, pensioners and those with disabilities. You can read more in the government's Cost of Living Support Fact Sheet.
  • The cost of this support is being partly covered by a windfall tax on oil and gas company profits – you can read more about how that works in the Energy Profits Levy Fact Sheet.

Why has the support changed from £200 to £400?

On 3rd February 2022, the Government announced a £200 energy bill rebate would be added to every UK energy account in October, and would then be paid back from everyone's bills gradually over the next five years.

On 26th May 2022, the government changed that plan, announcing that the £200 would no longer need to be paid back, and doubled it to £400. That's how we've got to the universal £400 energy grant in the Cost of Living Support package.

Why is my tariff going up more than 54%?

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You might have seen reference to the 54% figure. It's important to understand: this isn't a flat % increase on unit and standing charges, as that's not how the price cap works. The 54% figure is the average amount the price cap has increased since it was last set six months ago by Ofgem.

Put really simply: the price cap sets the rates that you pay, not the total amount you pay.

The price cap is actually a set of calculations which Ofgem creates based on what they see as a reasonable cost for an energy suppliers to charge customers on their variable tariff. This takes into account a bunch of different factors, including wholesale costs, infrastructure costs, and operational costs.

The really important bit: Ofgem derives the price cap figure from what they see as an "average" UK home on a variable tariff. Not everyone's home is the same: some are smaller, some are bigger; some live alone, some have big families. Each of these homes will use a different amount of energy.

So while the average home will see an increase of 54%, a home that uses less energy will see a smaller increase, and vice versa. If you were on a fixed tariff before and it's coming to an end soon, you could be seeing a higher increase than 54%. That's because wholesale energy costs around five times more now than it would've when you fixed your prices a year ago.

Fixed tariffs aren't protected by the price cap: instead, they're based on our real cost to buy a year's power for you – as that cost has gone up a lot, fixed prices are higher too. Customers are welcome to go on our Flexible Octopus tariff any time if they'd prefer that over a fixed price.

What if I keep getting into debt?

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Please, please get in contact with us if you’re struggling with your bills. There are many ways we can help.

We have loads of helpful information online about what to do if you're struggling to pay.

If you fall into debt for any reason, we can assist by:

  • Providing some breathing space — maybe in the form of a short term deferment of payment
  • Working directly with our team on a repayment plan that suits you
  • Adjusting your payment methods to find one that works best for you
  • Pointing you in the direction of experts who can help advise on your debt

If you're an Octopus customer, you can also access our Financial Support form here – a quick and simple online tool which asks you a series of questions about your financial situation. We can offer a number of support options based on circumstances and need, including access to existing schemes, monetary support from the fund, or a loan of a thermal imagery camera to find heat leaks at home.

Published on 3rd August 2022 by:

image of Tara Mullen

Tara Mullen

Head of Operations

Hey I'm Constantine, welcome to Octopus Energy!

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