October 2023
This page refers to the price cap from July 2023. Find out more about energy prices from October 2023 and what they mean for you.
What is the energy price cap?
The price cap limits the amount an energy supplier can charge for units of gas and electricity.
It is often communicated as an annual figure based on the ‘typical consumption’ of a dual-fuel household that pays for their energy bills by direct debit. Customers’ actual bill amount will depend on how much energy they use, so those who use more, will pay more.
What did the announcement say?
The price cap will fall from £2,500 to £2,074.
This means that the unit rate for gas and electricity that customers are charged on a standard variable tariff will be lower. The standing charges will remain the same/ vary by area.
It is important to note that this drop in the price cap will come into effect at the same time as the end of the Energy Price Guarantee.
This is the subsidy that the government has been providing UK energy bill payers since October 2022 (Without the Energy Price Guarantee, a typical annual bill would be £3,280 under the Ofgem Energy Price Cap).
This will mean that the benefit of this reduction to the price cap may not be felt as the rates and bills are likely to be similar to those received in the past year.
Does the price cap affect me?
If you’re on a variable tariff, like Flexible Octopus, the Ofgem Price Cap protects the price you pay. The price cap specifically applies to variable tariffs and not fixed tariffs.
What additional support is on offer?
From the government:
Full information can be found here but we’ve included a top line summary below.
Currently, people receiving means-tested benefits will receive a payment of £900, pensioners will receive £300 and those with disabilities will receive £150 additional financial support from the government.
These will be paid by the government directly into the bank account of the recipient and not via energy suppliers.
From Octopus Energy:
If you’re worried about paying your bills right now, head to our dedicated support blog.
You’ll find detailed information about our tariffs, background info on the energy crisis, and a link to our Financial Support form, which directs you to different ways we can help you if you’re struggling to pay – including a £15 million Financial Hardship fund.
What are the Flexible Octopus prices from July 1st, 2023?
Your energy prices depend on where you live, and how you choose to pay. Below, we’ve included a breakdown of all Flexible Octopus rates and charges by region and payment method.
Flexible Octopus prices for customers who pay by Direct Debit. You can also click here to download these prices in a PDF.
The Energy Price Guarantee (the government support that has been subsidising energy costs) will no longer reduce fixed or standard variable prices after July 1st.
- Every customer on Flexible Octopus will have their prices kept £12 below the Ofgem price cap (around £50 million in investment from Octopus).
- Good to know: if you’re not paying by Direct Debit, you could save a further £80 on average by setting one up.
Why do prices vary based on location and payment method?
It costs us more to supply energy to some areas depending on things like proximity to generators, cost of maintaining local networks and more.
The same is true with different payment methods – for example, it costs suppliers more to administer and manage accounts that don’t pay by Direct Debit, so Ofgem factors that into their Price Cap.
Frequently Asked Questions:
Do the energy price cap and / or the Energy Price Guarantee affect me?
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If you’re on a variable tariff, like our Flexible Octopus, the Ofgem Price Cap protect the price you pay.
The price cap specifically applies to variable tariffs because they aren’t fixed against the volatility in the energy markets. Different suppliers can refer to these tariffs in a number of ways; standard variable tariff (SVT), non-fixed, etc. At Octopus our variable energy tariff is called Flexible Octopus.
If you’d like to confirm which tariff you’re on, and details like your current prices and contract dates, you can see them on your online account (scroll a little way down and look at the details below your property address).
You can read more about the energy price cap and whether it affects you on Ofgem’s website.
How could I get energy £80 cheaper by paying by Direct Debit?
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Our Flexible tariff will have slightly different unit rates and standing charges based on your payment method. The £80 isn’t a flat discount for Direct Debit customers (or a charge on non-Direct Debit customers) – it’s the typical savings an average home could see over a year on the cheaper Direct Debit rates.
If you change how you pay, our system will pick that up and adjust your rates automatically, so if you don’t have a Direct Debit right now, it’s super easy to access the cheapest prices. All you need to do is set up a Direct Debit online and we’ll do the rest.
Why are tariffs sometimes cheaper if I pay by Direct Debit?
Not having a Direct Debit (and instead paying on receipt of your bill) costs us a lot more in admin.
We don’t think it’s fair to make everyone cover that extra cost, so we do offer a cheaper rate for those who choose to pay by Direct Debit, which costs us less to manage.
We run an incredibly efficient business, which means you’ll still get a great price if you choose to pay a different way – around £130 cheaper than the April Price Cap.
Is the £2,074 figure from Ofgem the maximum price I can pay for energy?
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No: this figure is not the absolute maximum a customer could pay.
If you’re affected by the price cap, the protection you receive is relative to how much energy you use.
Ofgem calculates the price cap based on the yearly usage of a typical medium consumption home (that’s 2900 kWh of electricity and 12000 kWh gas per year). It represents the maximum amount Ofgem considers fair for energy suppliers to charge customers on variable tariffs.
This figure is used by suppliers to apply the price caps protection against each customer’s actual usage. Put simply: if you use more – or less – energy than that typical home, your own yearly energy costs on a tariff priced at the maximum rates may be higher – or lower – than that £2,074 figure from Ofgem.
What are the actual maximum unit rates and standing charges of the energy price cap (adjusted for the Energy Price guarantee)?
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The price cap sets a maximum rate for:
- Energy units: the price suppliers can charge variable tariff customers per unit of gas and electricity you use
- Daily standing charges: the price suppliers can charge per day for ongoing costs, like paying the companies who manage distribution networks, operating costs, etc.
Ofgem have shared that on average – for customers paying by direct debit – the unit rates will be:
Electric:
- £0.30 p / kWh unit
- £0.53 p / day standing charge
Gas:
- £0.08 p / kWh unit
- £0.29 p / day standing charge
Important 1 these figures appear to be rounded to the nearest whole number, so the true figures may be slightly different. We are working with Ofgem to get more detailed information on these rates.
Important 2 these are averaged figures from across all regions in the UK. As certain costs vary, e.g. what transmission network fees we pay in an area, the actual maximum unit rate varies depending on region. There are other factors too: different maximum rates for Economy 7 tariffs (which have a day and a night price) and prepayment meters.
More information on other payment methods will be added to this page as it becomes available.
Why do high gas prices affect a 100% renewable energy tariff?
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Though green energy is cheaper to generate, on the market it’s sold at the same, higher price of gas and other fossil fuels. That’s down to the way the market’s set up. It’s similar to how houses are sold based on the price of neighboring homes, rather than what it cost to build. Read more about the latest in the energy market.
It’s mainly set up this way because the grid always has to be balanced: the UK’s energy needs (or ‘demand’) matched perfectly with an equal amount of power supply. The grid calls on all different types of power, from gas to renewables, to help with its crucial balancing job.
It wouldn’t be entirely fair to pay some energy generators less for their power when they’re fulfilling the same important function. This means that the highest price ends up setting the market price. When gas prices are high, all electricity prices are too.
We’re pushing for a system in which more and more of the electrons are green ones – because the more green power in the grid, the less we need to rely on expensive, dirty gas imports to meet our energy needs at all.
I’m on a fixed tariff right now, what happens when it ends?
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If you’re on a fixed tariff, the first thing to know is that the price cap doesn’t affect your current energy contract, but your prices will be reduced by the Energy Price Guarantee if they are above the Energy Price Guarantee rates.
We’ll always email you in advance of your fixed tariff coming to an end. In light of the Government support available, fixed tariffs don’t make a lot of sense at the moment, but when your fixed term comes to an end, you’ll be able to move onto Flexible Octopus.
If you’d like to confirm your current prices and contract dates, you can see them on your online account (scroll a little way down and look at the details below your property address) or on any PDF energy statement. It’s usually on the second page, near the top of the breakdown for your electricity and / or gas charges for the period.
