Huge energy company with 5.4 million customers will increase bills for thousands within weeks
A MAJOR energy company with 5.4 million customers increases bills by tens of thousands in weeks.
Octopus Energy is revising its tracker rate for the first time since its reintroduction last summer.
But it means that from Thursday February 15, customers will have to pay more to help the company recover the losses incurred by offering this cheap rate.
The Octopus Tracker offers customers gas and electricity prices equal to wholesale costs, plus a small additional tariff.
This means that the amount you pay can change daily, depending on what is happening in the energy market.
But it also means customers pay significantly less than the 29 million households on the Standard Variable Tariff (SVT), whose prices are capped by Ofgem.
For those who signed up for the Octopus Tracker before December 11, 2023, an average of 7.36 cents per kWh will be added to wholesale electricity costs.
And an average additional rate of 1.21 cents per kWh is added to the wholesale gas costs.
However, from February 15, all existing customers will see their prices increase when Octopus increases these additional rates for everyone.
The average additional rate added to wholesale electricity prices will increase by 2.40 cents per kWh to 9.77 cents per kWh.
And the average additional rate added to wholesale gas prices will increase by 0.26 cents per kWh to 1.48 cents per kWh.
Customers who signed up for the Octopus Tracker after December 11, 2023 will already pay the new additional rates listed above.
However, the supplier says that even though they have increased these additional costs, the rate has remained good and average rates between December and January have remained around 40% cheaper than the SVT.
Currently, 29 million customers on the SVT pay approximately 28.62 cents per kilowatt hour (kWh) for electricity and 7.42 cents per kWh for gas.
But over the past 30 days, thousands of customers already on the Octopus Tracker paid a maximum of 21.7 cents per kWh for electricity and 5.13 cents per kWh for gas.
Justifying the change, Octopus Energy said in an email to customers: “It has been a few years since the daily formula was updated.
“A lot has changed in energy since then – including a once-in-a-generation energy crisis and regulatory changes. A number of costs have slowly crept up.
“Since then we have been covering the extra costs for customers, which means you have got a particularly good deal.
“We postponed this for as long as possible, but ultimately Tracker is designed to transparently display real-time energy costs.
“We changed the formula for new customers in December 2023, but postponed it an extra few months for existing customers.”
Octopus Energy also updates the standing charge to match the other rates, and this increase will vary depending on where you live.
How do I sign up and change my mind?
If you are an existing Octopus customer and have previously signed up for the tracker rate waitlist, you will be automatically transferred to the rate no later than Friday, July 7.
The supplier will also charge any costs retroactively to July 1 for those who do not automatically switch until July 7.
From Friday, Octopus will remove the waiting list and all new and existing customers will have the opportunity to register for the tracker rate.
Existing customers can do this by logging into their energy dashboard on the Octopus Energy website.
New customers who want to switch to Octopus Energy must first register for the Flexible Energy Tariff.
They can then sign up for the Tracker rate when their online account is created, as described above for existing customers.
To qualify for the Octopus Tracker rate, you also need a smart meter.
If you change your mind and no longer wish to use the Octopus Tracker, customers can revert to the standard variable rate at no cost.
But this can take up to two weeks, during which you may have to pay higher prices if wholesale costs are high.
And after departure you cannot return to the tracker rate for nine months.
What other similar rates are available?
Octopus Energy also offers new and existing customers the option to switch to the Agile tariff.
Like Octopus Tracker, pricing for Agile customers is determined by wholesale rates.
However, energy prices change every half hour instead of once a day.
Agile is also the only smart tariff in the UK to pass on 'negative' prices to customers.
Suppliers are sometimes paid to take energy from the grid when supply exceeds demand.
However, as with the Octopus Tracker, unit prices can shoot above Ofgem capped levels in the colder months when demand rises.
Flexible customers are protected by Octopus' “Price Cap Protect”, but again it is important to weigh whether any short-term savings are worth it if prices rise in the future.
E.ON Next one's Pledge's variable rate offers a fixed discount of approximately 3% on Ofgem's price cap rates over 12 months.
It will save the average household around £50 a year, but will incur a £50 exit fee if you switch before the end of the year.