Energy prices from October, and what they mean for you

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The Government has announced an Energy Price Guarantee that caps variable energy prices at £2,500 for a typical home until April 2023.

The Energy Price Guarantee essentially functions as a discount on the existing Energy Price Cap, which is a safeguard for customers that determines the maximum price energy suppliers can charge for a variable tariff, based on wholesale energy costs.

Given that wholesale prices have gone through the roof in the current energy crisis, the Energy Price Guarantee is designed to keep the cap lower than it otherwise would be. (Without the Energy Price Guarantee, the price cap would only limit the average annual variable tariff bill to £3,549).

The Energy Price Guarantee will also protect customers on fixed tariffs (click here to find out more).

While the cost of living crisis is still huge, the Energy Price Guarantee  – on top of existing targeted government support and company-based financial assistance for those who need it most – will make a big difference.

If you're on a variable tariff like our 'Flexible Octopus', your new unit rates will match the Energy Price Guarantee, but your Octopus standing charges will be 4% lower – so you will be saving compared to Energy Price Guarantee rates from October 1st.

This guide will help answer the key questions our team has been answering since the announcement. We’ll continue to update this blog as more information becomes available.

If you’re worried about paying your bills right now, head to our dedicated support blog.

You’ll find detailed information about our tariffs, background info on the energy crisis, and a link to our Financial Support form, which directs you to different ways we can help you if you’re struggling to pay – including a £15 million Financial Hardship fund.



What are the Flexible Octopus prices from October 1st?

Your energy prices depend on where you live, and how you choose to pay. Below, we've included a breakdown of all Flexible Octopus rates and charges by region and payment method.

Flexible Octopus prices for customers who pay by Direct Debit. You can also click here to download these prices in a PDF.

Please note: prices on your online account and app don't display the Energy Price Guarantee discount just yet. We're updating this really soon, but you can find your discounted prices in your individual email from us, and on this page.

A table showing the rates for flexible Octopus customers paying by direct debit

Flexible Octopus prices for customers who pay by any other method (for example, standard credit). You can also click here to download these prices in a PDF.

Please note: prices on your online account and app don't display the Energy Price Guarantee discount just yet. We're updating this really soon, but you can find your discounted prices in your individual email from us, and on this page.

A table showing the rates for flexible Octopus customers paying by any other method (for example, standard credit)

These prices are protected by the government's Energy Price Guarantee, which caps unit rates for the next 6 months to protect households in the energy crisis. Our prices aren't exactly the same as the Guarantee.

  • Every customer on Flexible Octopus gets a 4% discount on their standing charges compared to the Guarantee.
  • The Guarantee cap is higher for people who don't pay by Direct Debit, but our prices are around £146 below that for the typical home. (Good to know — customers can save a further £80 on average by setting up a Direct Debit, which has a lower cap.)

Why are prices different based on location and payment method? It costs us more to supply energy to some areas depending on things like proximity to generators, cost of maintaining local networks and more. The same is true with different payment methods – for example, it costs suppliers more to administer and manage accounts that don't pay by Direct Debit, so Ofgem factors that into their Price Caps.

Frequently Asked Questions:

Do the energy price cap and/or the Energy Price Guarantee affect me?

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If you’re on a variable tariff, like our Flexible Octopus, the price cap (as adjusted by the Energy Price Guarantee) does affect you – but not right away. It will take effect from October 1st. From then on, suppliers will be able to use the new price cap to determine their variable tariff prices.

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 now 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.

Are you going to increase Flexible Octopus prices, and if so, when and by how much?

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On Flexible Octopus, Your new unit rates will rise to match the Energy Price Guarantee, but your Octopus standing charges will be 4% lower – so you will be saving compared to Energy Price Guarantee rates from October 1st.

We’ll soon be updating 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.

How does the 4% standing charge reduction for Flexible Octopus customers work?

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Flexible Octopus’ standing charges will be roughly 4% cheaper than the Energy Price Guarantee from October 1st. The exact % varies a tiny bit regionally, and is spread across both 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.

How could I get energy £80 cheaper by paying by Direct Debit?

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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 – roughly £100 cheaper than the October Price Cap.

Is the £2,500 figure from Ofgem the maximum price I can pay for energy?

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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.

What are the actual maximum unit rates and standing charges of the energy price cap (adjusted for the Energy Price guarantee)?

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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:

  • 34p / unit of electricity
  • 10.p / 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:

I’m on a fixed tariff right now, what happens when it ends?

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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 this winter, 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.

Why do high gas prices affect a 100% renewable energy tariff?

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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.

Published on 16th September 2022 by:

image of Jackson Howarth

Jackson Howarth

In-house Writer

Hey I'm Constantine, welcome to Octopus Energy!

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