Octopus Energy have announced a £40 million package to help customers amid the cost of living crisis.
Energy bills are set to soar by October 1 and the energy firm has launched a £40 million package to help its customers by applying a discount on standing charges.
All customers on Octopus's standard variable tariff will have a four per cent reduction applied automatically to their standing charges on their energy bills, compared to Ofgem's price cap.
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As the Express reports, 100,000 customers in greatest need will also be able to apply for 'standing charge holidays' of up to six month to help them manage the cost of living.
The standing charge holiday is for customers who need it most and the company say that they will no longer be penalised for having a prepayment meter after Octopus' CEO called the current standing charges, 'egregious'.
Greg Jackson, CEO and founder of Octopus Energy said: “High standing charges are egregious. This £40 million package is the beginning of our battle to bring them down.
"Far too many costs have been loaded onto standing charges - from grid and distribution charges to failed suppliers."
Mr Jackson continued: "These charges just make it more difficult for hard-pressed customers to save money through efficiency and Octopus is making a stand to change that.”
This decision will affect millions of Octopus Energy customers and many others will be hoping other energy suppliers follow suit.
A standing charge is a fixed daily amount that Britons have to pay, no matter how much energy they use. It covers the cost of supplying the property with gas and electricity but it has been causing controversy because it means that people who don't use any energy this year will still have to pay hundreds of pounds because of the standing charges.
While Mr Jackson slammed the high charges, Money Saving Expert founder Martin Lewis has been calling on Ofgem to shift the burden in the price cap away from the standing charge, to ensure that those who cut down their energy usage actually save money.
Speaking on Good Morning Britain, he said: “I and many others, I think the boss of Ovo is on later, he and I are in a joint campaign to get rid of the standing charge.
“As with all my campaigns with Ofgem it hasn’t happened.
“The standing charge means you pay a daily amount for gas and a daily amount for electricity even if you don’t use it."
The price cap is set to rise from £1,971 to £2,500 on October 1. It must be noted that this figure is the yearly bill of the average household and the 'price cap' only limits the price of each unit of energy - use more and your bill will be higher.
This higher rate has been frozen by the UK Government after Ofgem originally said the cap would rise to £3,549. While Prime Minister's energy price guarantee policy has frozen the amount firms can charge per unit of gas and electric, it is still higher than what we are currently paying.
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