Octopus Energy is reducing its standing charge for those on its variable tariff by 4% to provide additional support for consumers ahead of energy bills jumping in October.
The measure follows the Government announcing the Energy Price Guarantee earlier this month, which supersedes Ofgem’s Default Tariff Price Cap, and fixes energy bills at £2,500 for two years for domestic customers.
This limits unit rates for those on standard variable tariff’s to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October.
Standing charges remain unchanged by the measure however, and continue to sit at 46.36p per day for electricity and 28.49p per day for gas for a typical dual fuel customer paying by direct debit, as set out by Ofgem for the Default Tariff Cap.
Octopus Energy is now reducing this to 44.71p per day for electricity and 26.84p per day for gas, saving dual fuel customers around £12 per year. This support measure is expected to cost the company £30 million a year.
In addition to reducing the standing charge for all its Flexible Octopus customers, the supplier is giving up to 100,000 customers in the great need the ability to apply for a “standing charge holidays”.
This would see their standing charges reduced to zero for one, three or six months depending on personal circumstances, ensuring they are no longer be penalised just for having a meter, according to the company. This measure is expected to cost an additional £10 million.
“High standing charges are egregious,” said Greg Jackson, CEO and founder of Octopus Energy.
“This £40m 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. 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.”
For example, the cost of failed suppliers has added £94 to energy bills. There have been four suppliers to collapse in 2022, and 27 in 2021 as well as Bulb being put into Special Administration.
Octopus Energy will pay for the additional support measures from operational efficiencies, as well as slashing advertising and sponsorship it said.
There are around 3.4 million UK customers with the supplier, operating under the brands Octopus Energy, M&S Energy, Affect Energy, Ebico, London Power and Co-op Energy.
Over the last year, the company has also taken on customers from five failed suppliers, including Avro Energy, which with 500,000 customers represents the biggest Supplier of Las Resort customer migration seen in the UK.
