Octopus Energy today (05 August) backs the government’s plans to extend the energy price cap beyond 2023 – and urges it to protect households by making it permanent.
Since its introduction in January 2019, the price cap has saved households on default tariffs an estimated £100 a year each – or over £2 billion in total – on their energy bills.
This week Ofgem is expected to announce the new price cap level, with an increase of around £150 per year. This would take the average household’s energy bill from £1,138 to around £1,288 annually.
The change will come into effect on 01 October, impacting 11 million households across the country.
While energy bills are going up for many, the impact for customers would have been even bigger without the price cap.
The costs energy retailers incur to buy energy for their consumers have increased by almost 80% since the beginning of the year – from £418 in January to £747 in August 2021.
The rise was driven mainly by soaring gas prices, which reached their highest level in almost 16 years last week.
Despite the record levels of cheap renewable energy generation, UK wholesale prices for electricity are still heavily dependent on gas prices. Just last month, natural gas provided 44% of electricity demand in the UK.
‘The price cap is the single most effective intervention for energy customers. It’s like the minimum wage – it guarantees a level of decency for everyone, but of course they can still do better if they shop around.
‘Global gas prices have tripled in the last year, so without the price cap, energy prices would be hundreds of pounds higher than they are now. Never has the cap been more vital and it should be made permanent.’
CEO and founder of Octopus Energy
To identify and help customers who may be concerned about their finances, Octopus Energy is launching a new automated tool in October.
The tool, which all customers will be able to access via their online accounts, will provide tailored guidance on how Octopus can help customers with their bills. It will also provide help automatically where applicable.
The tool is modelled after Octopus Energy’s ‘Covid-19 Energy Hardship Support Form’, which successfully helped thousands of customers during the pandemic by understanding their financial constraints and needs and developing individual solutions for them.
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