How the £2,500 Energy Price Guarantee works
July 2023 update: The government Energy Price Guarantee ended in July 2023. We have more information about what this means for your energy prices.
The Government has put an Energy Price Guarantee in place to protect customers from high wholesale energy costs. It caps energy unit prices for most customers so that a typical home shouldn't pay more than around £2,500.
How this discount factors into your energy bills depends on a few things: like whether you’re on a fixed or variable tariff, how you choose to pay, and where in the UK you live. Find out all the details here, including the maximum Energy Price Guarantee rates set out by the government.
Want to know what you'll pay?
Our variable tariff Flexible Octopus is protected by the Energy Price Guarantee, but has slightly different prices to what's on this page. There are a few differences:
- Every customer on Flexible Octopus gets a 4% discount on their standing charges.
- Customers who don't pay by Direct Debit will pay around £146 less than the maximum Energy Price Guarantee cap
Get a breakdown of Flexible Octopus prices here:
What are the Energy Price Guarantee rates?
Below, we've broken down the maximum rates customers can be charged on a variable tariff for the next six months (it works a bit differently if you're on a fixed tariff, though these are still protected – more on this below).
For the typical home, the Energy Price Guarantee caps prices around 34p per unit of electricity, and 10.3p per unit of gas.
Here's a full breakdown of Energy Price Guarantee rates in each region if you pay by Direct Debit. You can also click here to download these prices in a PDF.
Here's a full breakdown of rates in each region if you pay by another method (for example, by standard credit). You can also download a PDF of the rates here.
Here's a full breakdown of rates in each region if you have a prepay meter. You can also download a PDF of the rates here.
*The Economy 7 cap, as shown in these tables, is a 'blended average'. This means that suppliers can alter day and night price levels so long as together, their average price does not exceed the Energy Price Guarantee cap. (This means the day price may be higher than the cap, for example).
How does the Energy Price Guarantee work?
The Energy Price Guarantee will be applied automatically, starting on October 1st. It will sit on top of the government’s existing support.
If you’re on a variable tariff (like Flexible Octopus):
The Energy Price Guarantee will be a discount on your unit prices, bringing them down to around 34p per unit of electricity, and 10.3p per unit of gas.
That’s the average across the UK, but there’s slight variation depending on where you live, and how you pay.
If you’re on a fixed tariff
If you’re on a fixed tariff, the Energy Price Guarantee will discount your tariff unit rates by up to 17.8p per unit of electricity and 4.4p per unit of gas.
Customers are on lots of different fixed tariffs depending on when they locked their rates in. The amount of discount you get depends on your tariff. The Energy Price Guarantee can only bring your tariff down as low as a Standard Variable Tariff – so, 34p per unit of electricity and 10.3p per unit of gas (or £2,500 for the typical home).
That means that if you’re currently on a fixed tariff that’s cheaper than that, you won’t get any further discount, but can continue to enjoy your cheaper fixed rates until your fixed term contract runs out.
If you're on prepay
If you’re on a prepayment meter, the Energy Price Guarantee will be applied to the rate you pay for each unit of energy, so the money you put on the meter will last longer than it would have otherwise.
We’ll apply the discount automatically – there’s no need to apply and you won’t need any vouchers.
Is the £2,500 figure the maximum price I can pay for energy?
The Energy Price Guarantee affects unit rates, so the protection you receive is relative to how much energy you use. 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, which is based on the yearly usage of a typical medium consumption home (that's 2900 kWh of electricity and 12000 kWh gas per year).
Why do I get energy ~£80 cheaper by paying by Direct Debit?
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.
Not having a Direct Debit 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.
The Energy Price Guarantee saves the typical home £1,000 a year
This freeze on prices is welcome news. It'll save the typical home £1,000 a year vs the October Price Cap – and it’s good to remember that all the other Cost of Living support from the government is still in play too. That includes £400 for every household and up to £1,200 for the most vulnerable (find out more in our blog).
If you're still worried you'll struggle to pay this Winter, we're running our own support schemes for customers who need it most via our £15 million Octo Assist fund.
For more information on our prices from October, and how they'll affect you, head to our blog.
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