Octopus Energy has launched a new tariff that follows wholesale energy costs in what it describes as "Britain's fairest energy tariff" in the cost of living crisis.
The supplier says its Octopus Tracker deal is Britain's first tariff to truly follow the wholesale price of energy, but has warned that this means prices can go up as well as down on a daily basis. 50,000 of its customers 5.3m will be asked to go on a waiting list to switch to a new tariff, which will kick in at the same time as Ofgem's new energy price cap on July 1.
Soaring energy prices over the past 18 months have just about wiped out any new deals. With the exception of a handful of deals for existing customers, there's not much choice over and above the standard variable rate.
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Launched in 2015, Octopus Energy is now one of the UK's biggest energy suppliers following its acquisition of Bulb, which went into Special Administration in November 2021.
Here we take a look at Octopus's Tracker deal and explore whether it's right for everyone:
How does it work?
The Tracker works by tracking the wholesale energy market on a daily basis, so you will pay different rates on different days. The product has a variable rate, which means prices can go up and down. However, as prices are at a wholesale rate they will be same as energy suppliers pay.
Will I save money?
Octopus said by matching energy consumption with lower-priced periods, customers could significantly reduce their energy bills. Over the last year, an average household on Octopus Tracker would have saved 4% compared to the new price cap of £2,074 coming into effect July 1, but prices can rise as well as fall.
How much will I pay?
Generally, this tariff works best for people who are able to shift their usage outside of expensive days. Ofgem's new energy price cap means that from July 1, electricity will be on average 30p per kWh, with a standing charge of 53p per day, and gas will be 8p per kWh, with a standing charge of 29p per day.
However, under the Octopus Tracker's Price Cap Protect, the maximum daily price is capped at 100p per kWh for electricity and 30p per kWh for gas, so you could end up paying a lot more if the wholesale prices suddenly shoot up.
Is it suitable for everyone?
Octopus cautioned that Tracker's price cap protection is a lot higher than the Ofgem energy price cap, which could mean householders end up paying much more than the maximum. In Octopus's own words: "if you can't afford prices to increase further, you're probably better off sticking with a protected tariff such as Flexible Octopus."
What are the alternatives?
Alongside the Tracker tariff, the supplier has the Octopus Agile tariff – an electricity-only deal that also tracks wholesale energy prices, but every half hour instead of every day. According to Octopus, due to volatile wholesale energy prices, it is currently only recommending the tariff to customers with solar panels, home batteries and electric vehicles (EVs) – as these households may be able to more easily shift use outside of peak periods, or they need to use a lot of electricity overnight to charge their EVs. Plus, as it's an electricity-only tariff, you'll need a separate gas tariff.
Can I switch off the Tracker if it doesn't suit me?
There are no exit fees to leave Tracker. However, you may have to wait up to two weeks before the move to another tariff will complete. After leaving, you'll need to wait nine months before going back on to Tracker.
I am not a customer, can I sign up?
You need to be a customer to join, but you can sign up here.
Do I need a smart meter?
Yes, but Octopus can install one for you at no extra cost.
What does Octopus say?
"Octopus Tracker is Britain's first tariff to truly follow the wholesale price of energy. Every day, we update the price of your energy based on an independently published wholesale market price - the price available to all suppliers. Tracker is available for electricity and gas. Over the warmer months, prices tend to be lower, and we expect them to increase – likely double – when the heating comes on and the sun starts setting earlier."
Are you struggling to make ends meet in the cost of living crisis? Join in the conversation below
"Tracker is a beta product. Some things may not work the first time, and installations and processes may take longer than we'd like. Third-party tech like In-home Displays won't always work, and on occasion, data issues with smart meters can take significant time to fix or prevent things from working at all. If you're cool with this, and you'd still like to work with us to make world-changing energy tariffs a reality, check this box so we know you're on board."
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