Monday September 18, 2023
The UK’s power regulator, Ofgem has introduced a lower to the power worth cap that can come into impact for invoice payers from October 1, 2023. Octopus is not going to improve standing prices for Versatile Octopus clients.
What’s the power worth cap?
The worth 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. Prospects’ precise invoice quantity will rely upon how a lot power they use, so those that use extra, can pay extra.
What did the announcement say?
The worth cap will fall from £1976 to £1834.
Essential Notice: This features a fall in Typical Home Consumption.
Which means that the unit price for fuel and electrical energy that clients are charged on an ordinary variable tariff will likely be decrease. Octopus standing prices are already the most cost effective of any massive provider, and we is not going to increase them in October (in opposition to Ofgem’s steering), and unit charges will likely be reduce.
You will need to notice that this winter your payments might proceed to really feel excessive as the federal government has ended the Invoice Help Scheme which noticed £400 price of funds added to clients balances final winter.
If you happen to’re struggling to pay we’ve got a lot of help on supply.
Does the worth cap have an effect on me?
If you happen to’re on a variable tariff, like Versatile Octopus, the Ofgem Value Cap protects the worth you pay. The worth cap particularly applies to variable tariffs and never fastened tariffs.
What further help is on supply?
From the federal government:
Full data will be discovered right here however we’ve included a high line abstract beneath.
Presently, 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 will likely be paid by the federal government immediately into the checking account of the recipient and never through power suppliers.
From Octopus Vitality:
If you happen to’re apprehensive about paying your payments proper now, head to our devoted help weblog.
You’ll discover detailed details about our tariffs, background data on the power disaster, and a hyperlink to our Monetary Help kind, which directs you to other ways we may also help you in case you’re struggling to pay – together with a £30 million Monetary Hardship fund.
What are the Versatile Octopus costs from October 1, 2023?
Your power costs rely upon the place you reside, and the way you select to pay. Under, we have included a breakdown of all Versatile Octopus charges and prices by area and fee methodology.
Versatile Octopus costs for patrons who pay by Direct Debit. You too can click on right here to obtain these costs in a PDF.
Abstract of the modifications
- Each buyer on Versatile Octopus will profit from diminished unit charges and no improve to their standing cost.
- If you happen to’re already in debt in your account or your funds do not appear to be the desire cowl your winter utilization primarily based on our forecast of what you’ll use, this might imply that our suggestion to your month-to-month fee goes up.
- Good to know: in case you’re not paying by Direct Debit, you can save an additional £80 on common by setting one up.
Why do costs range primarily based on location and fee methodology?
It prices us extra to provide power to some areas relying on issues like proximity to mills, price 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 components that into their Value Cap.
Why is my Direct Debit fee going up if tariff costs are taking place?
We recurrently overview your funds all year long to be sure you’re paying the correct quantity to cowl the power you employ. These checks are notably vital as you head into Winter. Most individuals spend extra on power within the colder months so it is excellent to have some credit score constructed up in your account to see you thru.
We’ve simply accomplished considered one of these fee critiques – so whereas the timing coincides with tariff costs coming down in October, the outcomes of your overview could possibly be completely different in case you’re utilizing extra power than we anticipated. We’ll counsel rising your fee to maintain your account wholesome and out of debt for the yr forward.
The easiest way to grasp our steered fee quantity is to take a look at your Stability Forecast. We constructed this useful software to point out you precisely how a lot we anticipate you will spend on power over the subsequent yr primarily based in your tariff costs and typical power consumption (which we work on primarily based on years of your meter studying information).
What if I believe Octopus’ fee suggestion is mistaken? You possibly can change your personal fee on-line and through our app. If you happen to attempt to set it so low that you just’re prone to falling into debt sooner or later, we simply ask that you just converse to us earlier than you make the change.
Desire a fast reminder of why we set your funds to a easy quantity yr spherical? Watch our fast explainer video:
Regularly Requested Questions:
Does the power worth cap have an effect on me?
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If you happen to’re on a variable tariff, like our Versatile Octopus, the Ofgem Value Cap defend the worth you pay.
The worth 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 various methods; normal variable tariff (SVT), non-fixed, and so forth. At Octopus our variable power tariff is named Versatile Octopus.
If you happen to’d like to substantiate which tariff you are on, and particulars like your present costs and contract dates, you may see them in your on-line account (scroll just a little manner down and have a look at the main points beneath your property tackle).
You possibly can learn extra in regards to the power worth cap and whether or not it impacts you on Ofgem’s web site.
How might 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 prices primarily based in your fee methodology. The £80 isn’t a flat low cost for Direct Debit clients (or a cost on non-Direct Debit clients) – it’s the everyday financial savings a median house might see over a yr on the cheaper Direct Debit charges.
If you happen to change the way you pay, our system will decide that up and modify your charges robotically, so in case you don’t have a Direct Debit proper now, it’s tremendous straightforward to entry the most cost effective costs. All that you must 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 a substitute paying on receipt of your invoice) prices us much more in admin.
We do not suppose it is truthful to make everybody cowl that additional price, so we do supply 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 important worth in case you select to pay a unique manner – round £130 cheaper than the April Value Cap.
Is the £1,923 determine from Ofgem the utmost worth I will pay for power?
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No: this determine isn’t absolutely the most a buyer might pay.
If you happen to’re affected by the worth cap, the safety you obtain is relative to how a lot power you employ.
Ofgem calculates the worth cap primarily based on the yearly utilization of a typical medium consumption house (that is 2900 kWh of electrical energy and 12000 kWh fuel per yr). It represents the utmost quantity Ofgem considers truthful for power suppliers to cost clients 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: in case you use extra – or much less – power than that typical house, your personal yearly power prices on a tariff priced on the most charges could also be greater – or decrease – than that £1,923 determine from Ofgem.
What does a change in Typical Home Consumption imply.
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Ofgem has lately diminished the ‘typical home consumption values’, in different phrases, how a lot they estimate a median family makes use of in power per yr. It’s because households within the UK have diminished their power utilization over the previous yr and this has impacted the ‘common’ quantity a family makes use of and due to this fact how a lot they pay on their power payments. Which means that the worth cap appears to be like 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 prices of the power worth cap?
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The worth cap units a most price for:
- Vitality models: the worth suppliers can cost variable tariff clients per unit of fuel and electrical energy you employ
- Each day standing prices: the worth suppliers can cost per day for ongoing prices, like paying the businesses who handle distribution networks, working prices, and so forth.
Ofgem have shared that on common – for patrons paying by direct debit – the unit charges will likely be:
Electrical:
- £0.27 p / kWh unit
- £0.53 p / day standing cost
Gasoline:
- £0.07 p / kWh unit
- £0.30 p / day standing cost
Essential 1 these figures look like rounded to the closest entire quantity, so the true figures could also be barely completely different. We’re working with Ofgem to get extra detailed data on these charges.
Essential 2 these are averaged figures from throughout all areas within the UK. As sure prices range, e.g. what transmission community charges we pay in an space, the precise most unit price varies relying on area. There are different components too: completely different most charges for Financial system 7 tariffs (which have a day and an evening worth) and prepayment meters.
Extra data on different fee strategies will likely be added to this web page because it turns into accessible.
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 identical, greater worth of fuel and different fossil fuels. That is right 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 fashion as a result of the grid at all times 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 truthful to pay some power mills much less for his or her energy once they’re fulfilling the identical vital perform. Which means that the best worth finally ends up setting the market worth. When fuel costs are excessive, all electrical energy costs are too.
We’re pushing for a system through which an increasing number of 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 satisfy our power wants in any respect.
I’m on a set tariff proper now, what occurs when it ends?
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If you happen to’re on a set tariff, the very first thing to know is that the worth cap doesn’t have an effect on your present power contract, however your costs will likely be diminished by the Vitality Value Assure if they’re above the Vitality Value Assure charges.
We’ll at all times e-mail you upfront of your fastened tariff coming to an finish. In mild of the Authorities help accessible, fastened tariffs do not make lots of sense in the intervening time, however when your fastened time period involves an finish, you can transfer onto Versatile Octopus.
If you happen to’d like to substantiate your present costs and contract dates, you may see them in your on-line account (scroll just a little 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 to your electrical energy and / or fuel prices for the interval.
