We’re usually requested whether or not you need to go for an Octopus Fastened or Versatile Octopus tariff and the way we set the value for every.
We have knocked collectively just a little video to clarify this:
The primary consideration might be how a lot certainty you need, and for a way lengthy.
Let’s begin with a proof of how the market works.
How we purchase our vitality
Octopus Vitality buys its vitality both from the wholesale market (alongside Ofgem-accredited renewable vitality certificates, after all) or instantly from renewable vitality turbines like photo voltaic farms.
As with all commodity, the value will differ. The electrical energy cost-per-unit (kWh) strikes minute-by-minute since merchants are always shopping for and promoting ahead contracts. This may be fairly advanced.
Give it some thought like attempting to foretell what the value of, say, peanuts might be in years to come back.
Issues can occur to have an effect on that worth. As an example, the US is the world’s greatest producer of peanuts, however just about all of the crops are within the southern states, that are liable to be hit by hurricanes and even tornadoes.
So what occurs once we give you a worth that’s fastened for 12 months?
The necessary bit to recollect is that once we purchase vitality in your behalf, we repair it for an agreed time (normally 12 months), in order that price per unit is locked in for that complete interval.
In a nutshell:
- The fastened charges we provide largely rely upon wholesale prices on the time that you simply repair
- We purchase your vitality upfront based mostly on this price per unit
- Your prices per unit on your vitality gained’t change for 12 months as a result of we purchased that vitality upfront
- As soon as we’ve purchased it on the worth, we’ve purchased it; we will’t promote it again
So you already know precisely what price per unit we’ll cost you on your consumption. Your vitality payments will nonetheless differ, although, in response to your utilization that month. To return to the peanuts analogy, we would purchase your peanuts at a retail price of £1 per kg, however your month-to-month invoice will rely upon what number of peanuts you eat that month. Should you eat 1kg, it’ll be a quid, however in the event you solely eat 500g, it’ll be 50p.
You’ll have certainty and are protected towards wholesale costs going up in a comparatively unstable buying and selling market.
What about when my fastened deal ends?
On the finish of your time period, we’ll give you a brand new worth on your Octopus Fastened tariff based mostly on wholesale prices at the moment. Should you don’t repair, don’t fear — you’ll roll onto our Versatile Octopus tariff which has no exit charges.
And what determines our versatile costs?
With our Versatile Octopus tariff (what some suppliers name customary variable), we comply with the actions of the wholesale market as intently as we will. These actions could be a little like charting the trail of a rollercoaster however in essence we clean out the highs and lows as a lot as we will.
In a nutshell:
- We purchase your vitality all year long
- Our wholesale prices change throughout the 12 months
- Now and again your charge could change as our wholesale prices differ
So you already know that the price per unit on your vitality consumption will extra intently comply with the market worth.
With a versatile tariff there might be extra pricing variability towards our fastened tariff the place we have fastened the price and purchased your vitality upfront — although it signifies that the price per unit will be barely unstable, and can go up in addition to down.
To sum up:
Whether or not you select Octopus Fastened or Versatile Octopus, our tariffs are at all times good worth. At time of writing, the distinction between our fastened and versatile tariffs is often round simply 5%. Some select fastened since they like to make certain that the value we quote is the value they’ll pay per unit for the subsequent 12 months.
We will’t at all times assure to be the most affordable, although we’re at all times there or thereabouts. However we can assure at all times to be honest, open and nice worth for cash. We’re happy with what we’re doing, and we’re proud that we’ve led the marketing campaign to shake up and disrupt how vitality suppliers set their costs, making it fairer and extra clear
That’s as a result of we imagine vitality must be extra inexpensive for all, not simply because some suppliers will attempt to tempt you in with a less expensive introductory supply, which solely prices you much more within the long-term.
Learn extra about our pricing and tariffs right here.
