Octopus Energy cap prices slightly below rivals

Customers will see their electricity bills automatically reduced as part of the temporary Loyal Octopus support.

The supplier is currently writing to all customers on their variable tariff to let them know how much bills will be increasing in April.

This is after regulator Ofgem set the default energy price cap at £1,971 per year for the period from April to October 2022.

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Price changes

Octopus Energy are in the process of informing customers on their Flexible Octopus tariff about the energy bill increases set to come into force from April.

However, they say they have decided to set their standard prices £50 below the level of the price cap as part of their Loyal Octopus support scheme.

They point to the fact that the other six major energy suppliers in the UK have set their new variable level within pennies of the maximum allowed.

In addition, they are doubling their Octopus Assist fund to £5m to better support customers who are struggling to pay their bills.

Their statement to customers highlights the fact they have yet to make a profit with their energy business and the price increases will not feed into any company profits.

Octopus Energy

Octopus has become one of the biggest names in UK energy in recent years. Their steady customer growth has been bolstered by taking on customers from failed suppliers like Iresa in 2018 and Avro Energy in 2021.

The supplier is a proponent of green energy, with their tariffs scoring well in our analysis of the greenest energy tariffs in the UK.

In January 2022, they called on the Government to introduce a scheme that would allow energy suppliers to spread price hikes over several years rather than implementing them all at once.

The Government opted for a £200 energy bill loan that will be repaid over five years by customers. This will be paid automatically to households in October 2022.

Energy crisis

Octopus Energy's decision to set their tariffs £50 lower than the maximum allowed is largely a symbolic gesture and probably won't have a significant impact on their customers' finances given the extent of the price rises households are about to see.

Even so, it's a welcome step that Octopus say will cost them around £50m in lost revenues over the next six months.

Amid profit announcements by competitors, this move sets Octopus apart from their major rivals, yet it's clear from their doubling of their Octopus Assist fund that they expect many customers to struggle with their energy bills over the next year.

Regulator Ofgem has increased the price cap by £693 from April, although there are estimates that the cap could soar further to over £3,200 when it is reassessed ahead of October 2022.

Customers of all suppliers are currently being notified of the increases set to come into force from April, with many expressing anger at the scale of the price hikes.

Octopus addressed some specific concerns in their FAQs on their website, pointing out that standing charges are increasing so much due to changes in Ofgem's calculations and the extra costs of dealing with failed energy suppliers.

In addition, they also highlighted the fact that renewable prices currently rise in line with wholesale gas prices. They say they are pushing to change this situation, but it is the way the system currently operates and suppliers have to work within it.

Find out more about the energy crisis or learn about our campaign to get the Government to provide more support to energy customers.