December, 2023
The UK’s power regulator, Ofgem has introduced a rise to the power value cap that may come into impact for invoice payers from January 1, 2024. Octopus is not going to improve standing expenses for Versatile Octopus prospects.
What’s the power value cap?
The value cap limits the quantity an power provider can cost for models of fuel and electrical energy.
It’s typically communicated as an annual determine primarily based on the ‘typical consumption’ of a dual-fuel family that pays for his or her power payments by direct debit. Clients’ precise invoice quantity will rely upon how a lot power they use, so those that use extra, pays extra.
What did the announcement say?
On the first January the Ofgem value cap will improve from £1,834 to £1,928.
Because of this the unit price for fuel and electrical energy that prospects are charged on an ordinary variable tariff shall be barely greater. Octopus standing expenses is not going to be raised in January.
It is very important be aware that this winter your payments may proceed to really feel excessive as the federal government has ended the Invoice Assist Scheme which noticed £400 price of funds added to prospects balances final winter.
In the event you’re struggling to pay now we have numerous help on provide.
Why are unit charges growing?
We’re dedicated to honest costs that really replicate the price of the power we provide to you. The wholesale power market has continued to be unstable in 2023 and the slight improve in unit price is because of the price of wholesale fuel growing. This has been impacted by world occasions together with continued and escalating battle in Europe and the Center East.
What further help is on provide?
From the federal government:
Full info might be discovered right here however we’ve included a prime line abstract beneath.
At the moment, folks receiving means-tested advantages will obtain a fee of £900, pensioners will obtain £300 and people with disabilities will obtain £150 further monetary help from the federal government.
These shall be paid by the federal government immediately into the checking account of the recipient and never through power suppliers.
From Octopus Vitality:
In the event you’re apprehensive about paying your payments proper now, head to our devoted help weblog.
You’ll discover detailed details about our tariffs, background information on the power disaster, and a hyperlink to our Monetary Assist kind, which directs you to alternative ways we can assist you should you’re struggling to pay – together with a £30 million Monetary Hardship fund.
What are the Versatile Octopus costs from January 1, 2024?
Your power costs rely upon the place you reside, and the way you select to pay. Beneath, we have included a breakdown of all Versatile Octopus charges and expenses by area and fee methodology.
Versatile Octopus costs for purchasers who pay by Direct Debit. You can too click on right here to obtain these costs in a PDF.
Abstract of the modifications
- Each buyer on Versatile Octopus will see barely elevated unit charges and no improve to their standing cost.
- In the event you’re already in debt in your account or your funds do not appear to be they may cowl your winter utilization primarily based on our forecast of what you’ll use, this might imply that our suggestion on your month-to-month fee goes up.
- Good to know: should you’re not paying by Direct Debit, you can save an additional £80 on common by setting one up.
Why do costs differ primarily based on location and fee methodology?
It prices us extra to produce power to some areas relying on issues like proximity to turbines, value of sustaining native networks and extra.
The identical is true with completely different fee strategies – for instance, it prices suppliers extra to manage and handle accounts that do not pay by Direct Debit, so Ofgem elements that into their Worth Cap.
Managing your direct debit quantity
One of the best ways to grasp our recommended fee quantity is to have a look at your Stability Forecast. We constructed this useful software to point out you precisely how a lot we count on you may spend on power over the following 12 months primarily based in your tariff costs and typical power consumption (which we work on primarily based on years of your meter studying knowledge).
What if I feel Octopus’ fee suggestion is unsuitable? You possibly can change your individual fee on-line and through our app. In the event you attempt to set it so low that you simply’re prone to falling into debt sooner or later, we simply ask that you simply converse to us earlier than you make the change.
Need a fast reminder of why we set your funds to a clean quantity 12 months spherical? Watch our fast explainer video:
Steadily Requested Questions:
Does the power value cap have an effect on me?
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In the event you’re on a variable tariff, like our Versatile Octopus, the Ofgem Worth Cap defend the worth you pay.
The value cap particularly applies to variable tariffs as a result of they aren’t fastened in opposition to the volatility within the power markets. Completely different suppliers can refer to those tariffs in a variety of methods; commonplace variable tariff (SVT), non-fixed, and so on. At Octopus our variable power tariff known as Versatile Octopus.
In the event you’d like to substantiate which tariff you are on, and particulars like your present costs and contract dates, you’ll be able to see them in your on-line account (scroll a bit of manner down and have a look at the main points beneath your property tackle).
You possibly can learn extra concerning the power value cap and whether or not it impacts you on Ofgem’s web site.
How may I get power £80 cheaper by paying by Direct Debit?
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Our Versatile tariff could have barely completely different unit charges and standing expenses primarily based in your fee methodology. The £80 isn’t a flat low cost for Direct Debit prospects (or a cost on non-Direct Debit prospects) – it’s the everyday financial savings a mean dwelling may see over a 12 months on the cheaper Direct Debit charges.
In the event you change the way you pay, our system will decide that up and regulate your charges mechanically, so should you don’t have a Direct Debit proper now, it’s tremendous straightforward to entry the most affordable costs. All it’s good to do is about up a Direct Debit on-line and we’ll do the remainder.
Why are tariffs typically cheaper if I pay by Direct Debit?
Not having a Direct Debit (and as an alternative paying on receipt of your invoice) prices us much more in admin.
We do not suppose it is honest to make everybody cowl that additional value, so we do provide a less expensive price for many who select to pay by Direct Debit, which prices us much less to handle.
We run an extremely environment friendly enterprise, which implies you’ll nonetheless get an incredible value should you select to pay a special manner – round £130 cheaper than the April Worth Cap.
Is the £1,928 determine from Ofgem the utmost value I pays for power?
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No: this determine shouldn’t be absolutely the most a buyer may pay.
In the event you’re affected by the worth cap, the safety you obtain is relative to how a lot power you utilize.
Ofgem calculates the worth cap primarily based on the yearly utilization of a typical medium consumption dwelling (that is 2700 kWh of electrical energy and 11500 kWh fuel per 12 months). It represents the utmost quantity Ofgem considers honest for power suppliers to cost prospects on variable tariffs.
This determine is utilized by suppliers to use the worth caps safety in opposition to every buyer’s precise utilization. Put merely: should you use extra – or much less – power than that typical dwelling, your individual yearly power prices on a tariff priced on the most charges could also be greater – or decrease – than that £1,928 determine from Ofgem.
What does a change in Typical Home Consumption imply.
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Ofgem has just lately diminished the ‘typical home consumption values’, in different phrases, how a lot they estimate a mean family makes use of in power per 12 months. It is because households within the UK have diminished their power utilization over the previous 12 months and this has impacted the ‘common’ quantity a family makes use of and subsequently how a lot they pay on their power payments. Because of this the worth cap seems prefer it has fallen extra considerably because it takes right into a account a fall in common power utilization in addition to a fall in unit price. You possibly can learn extra right here.
What are the precise most unit charges and standing expenses of the power value cap?
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The value cap units a most price for:
- Vitality models: the worth suppliers can cost variable tariff prospects per unit of fuel and electrical energy you utilize
- Every day standing expenses: the worth suppliers can cost per day for ongoing prices, like paying the businesses who handle distribution networks, working prices, and so on.
Ofgem have shared that on common – for purchasers paying by direct debit – the unit charges shall be:
Electrical:
- 28.62 p / kWh unit
- 53.35 p / day standing cost
Fuel:
- 7.42 p / kWh unit
- 29.60 p / day standing cost
Necessary: these are averaged figures from throughout all areas within the UK. As sure prices differ, e.g. what transmission community charges we pay in an space, the precise most unit price varies relying on area. There are different elements too: completely different most charges for Financial system 7 tariffs (which have a day and an evening value) and prepayment meters.
Extra info on different fee strategies shall be added to this web page because it turns into out there.
Why do excessive fuel costs have an effect on a 100% renewable power tariff?
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Although inexperienced power is cheaper to generate, available on the market it is bought on the similar, greater value of fuel and different fossil fuels. That is all the way down to the best way the market’s arrange. It is much like how homes are bought primarily based on the worth of neighbouring houses, moderately than what it prices to construct.
It is primarily arrange this manner as a result of the grid all the time needs to be balanced: the UK’s power wants (or ‘demand’) matched completely with an equal quantity of energy provide. The grid calls on all various kinds of energy, from fuel to renewables, to assist with its essential balancing job.
It would not be solely honest to pay some power turbines much less for his or her energy after they’re fulfilling the identical essential perform. Because of this the very best value finally ends up setting the market value. When fuel costs are excessive, all electrical energy costs are too.
We’re pushing for a system through which increasingly of the electrons are inexperienced ones – as a result of the extra inexperienced energy within the grid, the much less we have to depend on costly, soiled fuel imports to fulfill our power wants in any respect.
I’m on a hard and fast tariff proper now, what occurs when it ends?
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In the event you’re on a hard and fast tariff, the very first thing to know is that the worth cap doesn’t have an effect on your present power contract.
We’ll all the time electronic mail you prematurely of your fastened tariff coming to an finish.
In the event you’d like to substantiate your present costs and contract dates, you’ll be able to see them in your on-line account (scroll a bit of manner down and have a look at the main points beneath your property tackle) or on any PDF power assertion. It’s normally on the second web page, close to the highest of the breakdown on your electrical energy and / or fuel expenses for the interval.
