Our new Flexible tariff: £50 below the price cap for loyal customers, and £5 million more support for households
October 2022 update:
The content in this article is over 6 months old, and ongoing changes to the energy price cap mean it may no longer reflect our current pricing strategy.
The UK (indeed, the world) is over-dependent on gas, and it now costs us five times more than it did a year ago. Unfortunately, that means we need to raise both electricity and gas prices for our Flexible Octopus tariff
Head to frequently asked questions if you only have time for a quick rundown.
Here's what you need to know.
- Global energy prices have risen enormously in the last 12 months
- The Government price cap has increased almost £58 per month for a typical home
- We've spent £100 million holding down prices for Flexible Octopus customers over winter
- The other big suppliers have announced price rises to within a few pennies of the maximum legally allowed
- Our prices are lower for loyal customers: £50 less
- We’re doubling our Octopus Assist fund to £5m to help more customers who need it most
We're soon going to email you individually with all details of your new prices, but if you'd like to view your new rates now, skip to Flexible Octopus rates.
Good to know
this price change only affects customers on Flexible Octopus (not those on any of our fixed tariffs). We'll be contacting all customers impacted in the next few days, and we'll continue to honour our current Flexible prices until April 2nd – so customers have plenty of time to consider, or to talk to us about their options.
We’re committed to making renewable energy affordable for everyone, so we’d prefer to never raise prices. But when we do it is always by as little as possible, and we will reduce prices as soon as possible.
From April 2, our prices will be £50 below the cap for existing Flexible Octopus customers.
Today, we’re introducing temporary Loyal Octopus support to help customers keep their bills as low as possible in this difficult time. The support automatically reduces electricity charges by £48 per year compared to our standard tariff.
We’re the only large energy company to do anything like this. It’ll cost us another £50m over the next 6 months.
We’ve never made a profit and won’t do now, but we’ve received major investments and are more efficient than other companies. We are using this to do everything we can to help our existing customers through the crisis.
Our commitment to having better long-term prices for loyal customers than any other large company remains unchanged.
Are you struggling to pay your bills?
We’re doubling our Octopus Assist fund to £5m to help more households. If you're an Octopus customer struggling to pay your bills, please let us know through our Financial Support tool – we'll help wherever we can.
HELPFUL FAQS ABOUT RISING PRICES
What is the price increase?
This price increase will affect any customer on our Flexible Octopus (variable) tariff, effective from April 2.
If you are on one of our Flexible Octopus tariffs, your unit rates (the amount you pay for each kWh of gas or electricity you use), are not fixed, and can fluctuate based on factors like longterm changes in our costs to buy energy.
How do I know if I’m affected by this price increase?
You can check what tariff you are on in your online account, but we will also email every affected customer with a personal projection of what this increase means for your energy costs.
Does this mean you’re one of the more expensive suppliers now?
Absolutely not; quite the opposite. Our Flexible tariff has always been priced below the government's Energy Price Cap, and while most other large suppliers have increased prices as high as they're legally allowed to, with our Loyal Octopus support, Flexible Octopus is set £50 below the new cap level.
How do you compare to other suppliers?
The other big suppliers (British Gas, EDF, E.on, OVO, Scottish Power, and Bulb) have all announced April price rises already, taking their prices up to within pennies of the Energy Price Cap: the legal maximum they can charge their customers.
Our standard prices are slightly lower for new customers, and existing customers will save a further £50 a year compared to Price Cap prices.
How does the Loyal Octopus support work?
The support automatically reduces electricity charges by £48 per year compared to our standard tariff. By reducing your standing charge, all Flexible Octopus customers receive the same support. We’re the only large energy company to do anything like this. It’ll cost us another £50m over the next 6 months.
Only my gas is on Flexible Octopus. Can I receive the reward?
Our gas prices are still cheaper than any other large supplier. If your electricity is on a fixed or smart tariff, we’ve already priced your electricity as low as we possibly could (as though it includes the Loyal Octopus support). However, should your current tariff expire and your electricity roll onto Flexible Octopus, you’ll see the support in your new prices, as long as you've been an Octopus customer for at least 8 months.
If your electricity is currently supplied by another supplier, you can switch to Flexible Octopus and automatically qualify for our Loyal Octopus support as soon as you've been an Octopus customer for at least 8 months.
I’m already struggling due to Covid, why have you increased my prices further?
We know a lot of people are having a tough time right now. For a long time, we've sheltered customers from rises by cutting significantly into the small margin we usually put on our tariffs (~5%, to cover our business costs). This has cost us around £100m over winter.
We've already helped over 30,000 households with our Octopus Assist fund, which today we're doubling to £5m to help more customers at this difficult time.
If you or someone you know is struggling with bills, please do let us know.
How do I move to a fixed price tariff?
You can fix your prices at any time in a few clicks. If you're on Flexible Octopus and you've not received one already, you'll get an email very soon with all the details of this price change clearly set out. There'll be a personalised link in the email where you can fix your prices at any time.
Are you using the energy crisis to charge customers more and earn money for shareholders?
We've never made a profit, and with the measures announced today, we won't be making one this year either. But we have received major investments and are more efficient than other companies. We are using this to do everything we can to help our existing customers through the crisis.
Will I start having to pay more immediately?
We'll continue to honour your current unit prices until April 2. Over the coming weeks, we'll review all accounts and if you need to adjust your payments, we'll get in touch with a recommendation. You're always in control of your payments, and if you’d prefer to adjust your monthly payment now, you can do so at any time in your online account.
I’ve only just switched to you, why have you already increased your prices?
If you've not been with us long, we can appreciate this comes a bit out of the blue. But even after this increase Flexible Octopus is still very competitively priced: cheaper than our fixed tariffs, and £51 cheaper than the price cap for a typical home.
If you prefer, you can also fix your prices at any time, which will lock them in for 12 months. If you would like to fix your prices now, follow the link in our email setting out the details of this price change.
Why do renewable energy prices increase when gas prices rise?
The UK energy market works like this because the grid always has to balance: the UK's energy needs (or 'demand') need to match with an equal amount of power 'supply'.
National Grid's constant job is to call on many different types of power: increasingly green wind, solar and hydro; but also including gas, nuclear or even coal, to keep things in balance. Because all energy generators are filling the same important function in this way, the highest price ends up setting the wholesale market price. So when gas prices are high, electricity prices from all sources are too.
This is outdated and we are pushing for change but, for now, it’s just the way things work.
What’s happening with the Government’s £200 energy bill rebate?
We expect this to be a one-off credit to your account in October, but are discussing details with the government. We’ll let you know once it’s finalised.
I’m on one of your Fixed tariffs, am I affected?
No. On a fixed tariff you are protected against future wholesale price rises. Because we buy your energy up-front, your costs per unit don’t change during the fixed period.
I want to take my business elsewhere, will you penalise me for leaving?
Not at all – you're on a Flexible tariff with no exit fees.
And we understand. No-one wants to pay more for their energy than they need to, and that’s a principle we use to set our prices at a fair level. However, changing wholesale prices are affecting all suppliers in the industry, not just ourselves.
All the other big suppliers have already announced larger rises from April. As a result, we think it's important to have all the correct and relevant information when looking at other suppliers.
As the wholesale cost determines energy prices across the whole industry, we'd recommend comparing the unit rates and standing charges of any deals you look at carefully.
Of course if you still wish to switch away, we completely understand, and wish you the best of luck in the future.
Why are standing charges increasing?
Ofgem have increased the maximum standing charge because the way they're calculated has changed (shifting some costs from the unit rate to standing charge). The standing charge also includes costs to maintain the energy distribution network, so can cover things like repairs following the storms last year. Sadly, the cost to consumers of supporting failed suppliers are also added here.
Ofgem have broken down the up to date split of costs that make up a typical standing charge here.
It costs different amounts to manage the networks and distribute power to different areas of the UK, which is why standing charges also vary depending on where you live.
What are the unit rates and standing charges of the new Flexible Octopus prices?
We're going to email every single customer impacted with full details and a breakdown of prices anyway very shortly, but if you'd like to know your rates now, we've published them for you here, split by region.
These unit rates and charges don't include the £48 Loyal Octopus support. Your Loyalty savings will be automatically calculated each month and deducted from your bill (it'll appear on your PDF statement as well) – adding up to £48 over a year.
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