We’re usually requested whether or not you need to go for an Octopus Mounted or Versatile Octopus tariff and the way we set the value for every.
We have knocked collectively a bit video to clarify this:
The primary consideration will likely be how a lot certainty you need, and for the 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, in fact) or immediately from renewable vitality mills like photo voltaic farms.
As with all commodity, the value will fluctuate. The electrical energy cost-per-unit (kWh) strikes minute-by-minute since merchants are continually 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 will likely be in years to come back.
Issues can occur to have an effect on that value. As an illustration, the US is the world’s greatest producer of peanuts, however just about all of the crops are within the southern states, that are susceptible to be hit by hurricanes and even tornadoes.
So what occurs once we give you a value that’s fastened for 12 months?
The vital bit to recollect is that once we purchase vitality in your behalf, we repair it for an agreed time (often 12 months), in order that value per unit is locked in for that complete interval.
In a nutshell:
- The fastened charges we provide largely rely on wholesale prices on the time that you just repair
- We purchase your vitality upfront based mostly on this value per unit
- Your prices per unit in 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 value, we’ve purchased it; we will’t promote it again
So you realize precisely what value per unit we’ll cost you in your consumption. Your vitality payments will nonetheless fluctuate, although, in line with your utilization that month. To return to the peanuts analogy, we’d purchase your peanuts at a retail value of £1 per kg, however your month-to-month invoice will rely on what number of peanuts you eat that month. If you happen to eat 1kg, it’ll be a quid, however for those who solely eat 500g, it’ll be 50p.
You’ll have certainty and are protected in opposition to 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 value in your Octopus Mounted tariff based mostly on wholesale prices at the moment. If you happen to 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 normal variable), we observe the actions of the wholesale market as intently as we will. These actions generally is 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 yr
- Occasionally your price might change as our wholesale prices fluctuate
So you realize that the associated fee per unit in your vitality consumption will extra intently observe the market value.
With a versatile tariff there will likely be extra pricing variability in opposition to our fastened tariff the place we have fastened the associated fee and acquired your vitality upfront — although it implies that the associated fee per unit might be barely unstable, and can go up in addition to down.
To sum up:
Whether or not you select Octopus Mounted 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 sure that the value we quote is the value they’ll pay per unit for the following 12 months.
We are able to’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 truthful, open and nice worth for cash. We’re pleased with what we’re doing, and we’re proud that we’ve got 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 reasonably priced 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.