UK gas and electricity prices are set to soar from April 1 following a record breaking increase in the energy price cap.
Energy regulator Ofgem announced that the energy price cap, which is the maximum amount an energy company can charge an average customer, will increase by 54%. For an average household, this means that they will see an annual increase of £693 applied to their bills, although this will vary depending on how much energy your household uses.
Energy providers will be contacting customers this month to explain how these changes will affect them, with bills estimated to increase from £1,277 to £1,971 for an average household.
Read more: Everything you need to know about the energy crisis if you are a British Gas customer
The increase in energy bills is a result of an increased demand for gas coupled with a reduced supply, which has resulted in wholesale prices rising above the price cap. The increase has been influenced by the reopening of the economy after lockdown and the crisis in Russia.
But what does this mean if you are a customer with Octopus Energy? The renewable energy group is the UK's fourth biggest energy provider and is currently the only UK energy firm to offer its customers prices below the price cap. Here's everything you need to know.
How will the price cap impact Octopus customers?
Customers who are on the energy provider's Flexible Octopus tariff will see their gas and electricity prices rise in light of the fuel cap increase. Octopus will contact all customers who are affected and will continue to honour its current flexible prices until April 2.
If you are on a Flexible Octopus (variable) tariff, your unit rates are not fixed and can fluctuate depending on the changing costs of energy.
Octopus will email every customer who will be impacted by these changes, offering them a personal projection of what this means for their energy costs. You can also check which tariff you are on by accessing your online account. Customers also have the option to fix their prices at any time by switching to a fixed tariff, and therefore locking their prices in for 12 months.
How does this compare to other providers?
Octopus Energy is currently the only energy provider to offer its customers tariffs below the energy price cap. Every Octopus customer, existing or new, who is on a standard variable tariff will get £2 off the price cap a year.
Octopus' flexible tariff has always been priced below the government's energy price cap, and with the introduction of the company's temporary Loyal Octopus support scheme, the flexible Octopus tariff will be set £50 below the new price cap level for loyal customers.
Loyal customers will also receive an additional £48 rebate through the Loyal Octopus support scheme. The Loyal Octopus support automatically reduces electricity charges by £48 per year compared to the standard tariff price. This means that existing Octopus customers will be paying £50 less than the price cap overall.
Will any Octopus customers not be impacted by these changes?
Those customers who are on a fixed tariff will not see their bills increase. This is because the fixed tariff protects against wholesale price rises, meaning your costs per unit don't change during the fixed period.
Is there support available?
Octopus is also doubling its Octopus Assist fund to £5m, which will be used to help as many households as possible. If you are an Octopus customer who is struggling to pay your bills, you can let the provider know through their online financial support tool.
The Octopus Assist fund provides grants to those who are struggling, which range from £50 to £500.
Why do renewable energy prices increase when gas prices rise?
This increase occurs because the grid always needs to balance - the UK's energy demand needs to match with an equal amount of supply.
The National Grid uses many different types of power, and because all energy generators are filling the same function, the highest price ends up setting the wholesale market price. This means that whenever gas prices are high, electricity prices from all sources end up increasing too.
