My gas and electricity is on a fixed rate deal with Octopus until March 2022 but I’m worried the energy price spike will send my bills soaring after that.
My account says that I am on the Super Green Octopus 12 month fixed tariff and it runs until 13 March 2022.
I am paying 2.91p/kWh and 26.06p per day for gas and 17.114/kWh and 24.49p per day for electricity, how does this compare to current prices and the price cap?
Also, what will happen when the deal ends, am I likely to move onto whatever the variable rate price is then and suddenly see my bills jump?
The energy crisis has meant many households are facing higher bills over the next few months
Grace Gausden, This is Money, replies: With the energy crisis ongoing, thanks to rising wholesale gas prices, customers on fixed tariffs are breathing a sigh of relief right now.
These customers will not see a large hike in their bills for as long as their contract lasts – with most having signed up to these deals when wholesale gas costs were much lower.
It’s worth pointing out here that if your supplier goes bust, the fixed-rate won’t be honoured and you’ll be moved to a new tariff with a new supplier via Ofgem – and currently, that could mean a huge hike in costs.
There is the concern that once fixed deals come to an end, prices will soar for customers as fixed tariffs are now much pricier than they were just weeks ago.
It will depend on when a contract comes to an end as to how much a new fixed tariff might be.
For example, those whose fixed deals are ending soon will find that new contracts are likely to be hundreds of pounds more expensive than their existing plan.
However, for consumers whose deal ends next year, it is unknown what the wholesale situation will be like and therefore, how expensive the new tariffs might be.
In your situation, when your tariff runs out in March next year, it is not certain how pricey offers will be.
It is a time when the crisis may be on its way to being resolved or, alternatively, a period when the issue is still ongoing.
How does my current fixed tariff compare to the best available deals?
With regards to how much the amount you are paying on your fixed deal with Octopus Energy now compares to other offers, it is difficult to say.
This is because energy deals are constantly changing and will be different for every household, changing by postcode.
However, you can guarantee your current cost is much cheaper than the current ‘best’ available tariffs as they have soared since the energy crisis began.
Octopus Energy has warned prices will start to go up but it is hoping to still give good value
The new price cap
Ofgem’s price cap is due to rise for standard variable tariff customers on 1 October from an average of £1,138 to £1,277 – a hike of £139.
Whilst, at first, many were shocked at the steep increase but now, thanks to the cap, these are some of the best deals on the market.
This means, at present, switching to a default plan, which used to be the priciest option, might be the best solution to the current situation.
How does my current fixed tariff compare to the energy price cap?
Currently, you are paying 17.114 per kWh and 24.49p per day for electricity and 2.91p per kWh and 26.06p per day for gas with Octopus.
From 1 October the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 21p per kWh for electricity customers and 4p per kWh for gas customers.
This means you are currently paying less for both gas and electricity.
However, the price cap will only stay fixed until April next year – just a few weeks after your fixed plan ends meaning this is likely to all change again.
If it increases, as it is expected to, most, if not all, suppliers will price to the cap and this means the price of your bills could soar.
Alternatively, it may be the case that the level is still the best value option for consumers.
However, Octopus believes it can still offer you the best value deals.
There is concern that once a number of fixed deals come to an end, prices will soar
An Octopus Energy spokesperson replies: When Octopus customers’ fixed contracts come to an end, they’re given a choice of whether to fix their prices again, or do nothing and roll onto our flexible tariff.
At the moment, suppliers are buying energy wholesale for more than 212 per cent more than they were a year ago, meaning customers who fixed their prices last year will see higher rates when it comes time to move to a new tariff.
Customers can rest assured that our Flexible tariff, like all others in the industry, is capped to a fair level decided by the government and Ofgem.
In fact, Octopus’s Flexible tariff is one of the best priced in the market, available to current customers at an average of £51 below the price cap.
For as long as we’ve been in business we’ve fought against ‘tease and squeeze’ tactics in energy.
That means we’ve always kept the difference between our variable tariff and our fixed tariff as small as possible.
We campaigned hard for the energy price cap to protect customers of all suppliers from rip-off deals, but rather than using the maximum price cap as a guide, we’ve always strived to keep prices as low as we can for our own customers: our variable tariff has been an average of £130 below the cap since it was introduced.
In fact, customers who’ve been on our variable tariff for the five years since we launched would’ve saved an average of £892 compared to the average ‘big six’ variable tariff.
So though households may see their bills increase when it comes time to renew their tariffs as a result of soaring wholesale costs, our customers will always get great value, outrageously good customer service and fairly priced green energy.
Anna Moss, head of consumer markets, at Cornwall Insight, replies: The customer’s unit rates will be dependent on where they live.
Suppliers don’t have to price at the cap so it’s hard to say the structure of the tariff they will have in each region available at this point.
When your fixed deal ends you are usually put onto a default tariff, but you can also switch away. While there aren’t many tariffs available on switching sites at the moment this may have changed by March 2022.
Even though the price cap will be increasing again in April, this reflects the higher wholesale costs over the last few months.
If the wholesale price starts coming down in the next few months and into spring, it might be that there are cheaper fixed tariffs available again that are under the cap level.
Grace Gausden, This is Money, adds: Ultimately, it is difficult to say what the situation will be next March and therefore, what is the best course of action for you to take.
It will be easier to see nearer the time whether rates are still sky high or if they have dropped significantly and make a decision then.