Energy prices from July, and what they mean for you

If you’re on a variable tariff, like our Flexible Octopus, the Energy Price Guarantee and the Ofgem Price Cap protect the price you pay. The Energy Price Guarantee took effect from October 1st 2022, and prices fluctuate slightly every 3 months when the underlying Ofgem Price Cap updates.

The price cap specifically applies to variable tariffs because they aren’t fixed against the volatility in the energy markets. Different suppliers can refer to these tariffs in a number of ways; standard variable tariff (SVT), non-fixed, etc. At Octopus our variable energy tariff is called Flexible Octopus.

If you’re on a fixed tariff, the price cap doesn't affect you, but the Energy Price Guarantee does. Where your current rates and charges would normally be locked in to the end of your contract, the Energy Price Guarantee may give you discounted rates (visit this Government page for more information).

If you’d like to confirm which tariff you're on, and details like your current prices and contract dates, you can see them on your online account (scroll a little way down and look at the details below your property address).

You can read more about the energy price cap and whether affects you on Ofgem’s website here.

On Flexible Octopus, Your new unit rates will rise to match the Energy Price Guarantee, but your Octopus standing charges will be 4% lower on average – so Flexible Octopus customers will continue to save compared to Energy Price Guarantee rates from April 1st.

We have updated our Balance Forecast, which allows you to see how much you’ll pay monthly across the year, to factor in the Energy Price Guarantee, so you can see exactly how your bills are going to change. You can also turn on "Crystal Ball mode" to get a sense of how future energy prices might affect your costs and account balance.

Flexible Octopus’ standing charges will be roughly 4% cheaper than the Energy Price Guarantee from April 1st. The exact % varies a tiny bit regionally, and is slightly different for electricity and gas standing charges – but a typical dual fuel customer will get their standing charge just over 4% cheaper than the Guarantee.

If you’re curious to see a breakdown of the Energy Price Guarantee rates, you can find them for every region here.

Our Flexible tariff will have slightly different unit rates and standing charges based on your payment method. The £80 isn’t a flat discount for Direct Debit customers (or a charge on non-Direct Debit customers) – it’s the typical savings an average home could see over a year on the cheaper Direct Debit rates.If you change how you pay, our system will pick that up and adjust your rates automatically, so if you don’t have a Direct Debit right now, it’s super easy to access the cheapest prices. All you need to do is set up a Direct Debit online and we’ll do the rest.

Why are tariffs sometimes cheaper if I pay by Direct Debit?

Not having a Direct Debit (and instead paying on receipt of your bill) costs us a lot more in admin. We don't think it's fair to make everyone cover that extra cost, so we do offer a cheaper rate for those who choose to pay by Direct Debit, which costs us less to manage. We run an incredibly efficient business, which means you’ll still get a great price if you choose to pay a different way – around £130 cheaper than the April Price Cap.

No: this figure is not the absolute maximum a customer could pay. If you’re affected by the price cap, the protection you receive is relative to how much energy you use.

Ofgem calculates the price cap based on the yearly usage of a typical medium consumption home (that's 2900 kWh of electricity and 12000 kWh gas per year). It represents the maximum amount Ofgem considers fair for energy suppliers to charge customers on variable tariffs.

This figure is used by suppliers to apply the price caps protection against each customer's actual usage. Put simply: if you use more - or less - energy than that typical home, your own yearly energy costs on a tariff priced at the maximum rates may be higher - or lower - than that £2,500 figure from Ofgem.

The price cap sets a maximum rate for:

• Energy units: the price suppliers can charge variable tariff customers per unit of gas and electricity you use
• Daily standing charges: the price suppliers can charge per day for ongoing costs, like paying the companies who manage distribution networks, operating costs, etc.

Ofgem have shared that on average, the maximum unit rates (adjusted for the Energy Price guarantee) are:

• 33.2p / unit of electricity
• 10.3p / unit of gas

These are averaged figures from across all regions in the UK. As certain costs vary, e.g. what transmission network fees we pay in an area, the actual maximum unit rate varies depending on region. There are other factors too: different maximum rates for Economy 7 tariffs (which have a day and a night price) and prepayment meters.

If you’re curious to see a breakdown of the Energy Price Guarantee rates, you can find them for every region, and payment method here.

Alternatively, you can also download them here:

• Download Energy Price Guarantee rates for each region if you pay by Direct Debit
• Download rates in each region if you pay by another method (for example, by standard credit).

Though green energy is cheaper to generate, on the market it's sold at the same, higher price of gas and other fossil fuels. That's down to the way the market's set up. It's similar to how houses are sold based on the price of neighbouring homes, rather than what it cost to build. Read more about the latest in the energy market.

It's mainly set up this way because the grid always has to be balanced: the UK's energy needs (or 'demand') matched perfectly with an equal amount of power supply. The grid calls on all different types of power, from gas to renewables, to help with its crucial balancing job. It wouldn't be entirely fair to pay some energy generators less for their power when they're fulfilling the same important function. This means that the highest price ends up setting the market price. When gas prices are high, all electricity prices are too.

We’re pushing for a system in which more and more of the electrons are green ones – because the more green power in the grid, the less we need to rely on expensive, dirty gas imports to meet our energy needs at all.

If you’re on a fixed tariff, the first thing to know is that the price cap doesn’t affect your current energy contract, but your prices will be reduced by the Energy Price Guarantee if they are above the Energy Price Guarantee rates.

We’ll always email you well in advance of your fixed tariff coming to an end. In light of the Government support available, fixed tariffs don't make a lot of sense at the moment, but when your fixed term comes to an end, you'll be able to move onto Flexible Octopus.

If you’d like to confirm your current prices and contract dates, you can see them on your online account (scroll a little way down and look at the details below your property address) or on any PDF energy statement. It’s usually on the second page, near the top of the breakdown for your electricity and / or gas charges for the period.