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 fees for Versatile Octopus prospects.
What’s the power worth cap?
The value cap limits the quantity an power provider can cost for items 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?
The value cap will fall from £1976 to £1834.
Necessary Notice: This features a fall in Typical Home Consumption.
Which means that the unit charge for fuel and electrical energy that prospects are charged on an ordinary variable tariff will likely be decrease. Octopus standing fees are already the most cost effective of any giant provider, and we is not going to increase them in October (in opposition to Ofgem’s steerage), and unit charges will likely be lower.
You will need to notice 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.
Should you’re struggling to pay we now have numerous help on provide.
Does the value cap have an effect on me?
Should you’re on a variable tariff, like Versatile Octopus, the Ofgem Worth Cap protects the value you pay. The value cap particularly applies to variable tariffs and never mounted tariffs.
What further help is on provide?
From the federal government:
Full data might 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 straight into the checking account of the recipient and never through power suppliers.
From Octopus Vitality:
Should 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 type, which directs you to alternative ways we will help you in the event you’re struggling to pay – together with a £15 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. Beneath, we have included a breakdown of all Versatile Octopus charges and fees by area and fee methodology.
Versatile Octopus costs for purchasers who pay by Direct Debit. You too can click on right here to obtain these costs in a PDF.
Abstract of the adjustments
- Each buyer on Versatile Octopus will profit from decreased unit charges and no improve to their standing cost.
- Should you’re already in debt in your account or your funds do not seem like the need 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 the event you’re not paying by Direct Debit, you may save an extra £80 on common by setting one up.
Why do costs fluctuate primarily based on location and fee methodology?
It prices us extra to provide power to some areas relying on issues like proximity to mills, value of sustaining native networks and extra.
The identical is true with totally 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.
Why is my Direct Debit fee going up if tariff costs are happening?
We frequently overview your funds all year long to be sure you’re paying the correct quantity to cowl the power you utilize. These checks are significantly essential 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 completed one in every of these fee evaluations – so whereas the timing coincides with tariff costs coming down in October, the outcomes of your overview may very well be totally different in the event you’re utilizing extra power than we anticipated. We’ll recommend growing your fee to maintain your account wholesome and out of debt for the 12 months forward.
One of the simplest ways to know our advised fee quantity is to have a look at your Steadiness Forecast. We constructed this useful software to indicate you precisely how a lot we anticipate you will 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 information).
What if I feel Octopus’ fee suggestion is unsuitable? You may change your individual fee on-line and through our app. Should 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 communicate 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:
Often Requested Questions:
Does the power worth cap have an effect on me?
Should you’re on a variable tariff, like our Versatile Octopus, the Ofgem Worth Cap shield the value you pay.
The value cap particularly applies to variable tariffs as a result of they aren’t mounted in opposition to the volatility within the power markets. Completely different suppliers can refer to those tariffs in numerous methods; normal variable tariff (SVT), non-fixed, and so on. At Octopus our variable power tariff known as Versatile Octopus.
Should you’d like to verify 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 just a little approach down and have a look at the main points beneath your property handle).
You may learn extra in regards to the power worth 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?
Our Versatile tariff could have barely totally different unit charges and standing fees 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 residence may see over a 12 months on the cheaper Direct Debit charges.
Should you change the way you pay, our system will choose that up and regulate your charges routinely, so in the event you don’t have a Direct Debit proper now, it’s tremendous simple to entry the most cost effective costs. All you might want to do is ready 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 further value, so we do provide a less expensive charge 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 worth in the event you select to pay a distinct approach – round £130 cheaper than the April Worth Cap.
Is the £1,923 determine from Ofgem the utmost worth I pays for power?
No: this determine just isn’t absolutely the most a buyer may pay.
Should you’re affected by the value cap, the safety you obtain is relative to how a lot power you utilize.
Ofgem calculates the value cap primarily based on the yearly utilization of a typical medium consumption residence (that is 2900 kWh of electrical energy and 12000 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 value caps safety in opposition to every buyer’s precise utilization. Put merely: in the event you use extra – or much less – power than that typical residence, your individual yearly power prices on a tariff priced on the most charges could also be increased – or decrease – than that £1,923 determine from Ofgem.
What does a change in Typical Home Consumption imply.
Ofgem has lately decreased 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 decreased their power utilization over the previous 12 months 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 value 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 charge. You may learn extra right here.
What are the precise most unit charges and standing fees of the power worth cap?
The value cap units a most charge for:
- Vitality items: the value suppliers can cost variable tariff prospects per unit of fuel and electrical energy you utilize
- Each day standing fees: the value 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 will likely be:
- £0.27 p / kWh unit
- £0.53 p / day standing cost
- £0.07 p / kWh unit
- £0.30 p / day standing cost
Necessary 1 these figures seem like rounded to the closest complete quantity, so the true figures could also be barely totally different. We’re working with Ofgem to get extra detailed data on these charges.
Necessary 2 these are averaged figures from throughout all areas within the UK. As sure prices fluctuate, e.g. what transmission community charges we pay in an space, the precise most unit charge varies relying on area. There are different elements too: totally 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 out there.
Why do excessive fuel costs have an effect on a 100% renewable power tariff?
Although inexperienced power is cheaper to generate, in the marketplace it is bought on the similar, increased worth 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 value of neighbouring houses, slightly than what it prices to construct.
It is primarily arrange this manner as a result of the grid all the time must be balanced: the UK’s power wants (or ‘demand’) matched completely with an equal quantity of energy provide. The grid calls on all several types of energy, from fuel to renewables, to assist with its essential balancing job.
It would not be completely honest to pay some power mills much less for his or her energy once they’re fulfilling the identical essential operate. 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 wherein 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 hard and fast tariff proper now, what occurs when it ends?
Should you’re on a hard and fast tariff, the very first thing to know is that the value cap doesn’t have an effect on your present power contract, however your costs will likely be decreased by the Vitality Worth Assure if they’re above the Vitality Worth Assure charges.
We’ll all the time e mail you prematurely of your mounted tariff coming to an finish. In mild of the Authorities help out there, mounted tariffs do not make lots of sense for the time being, however when your mounted time period involves an finish, you can transfer onto Versatile Octopus.
Should you’d like to verify your present costs and contract dates, you’ll be able to see them in your on-line account (scroll just a little approach down and have a look at the main points beneath your property handle) or on any PDF power assertion. It’s often on the second web page, close to the highest of the breakdown to your electrical energy and / or fuel fees for the interval.
The contents throughout the article have been provided through Newswire for Finencial.com, go to