Stick or fix your energy tariff before April 2022?
With the energy price cap due to rise by an estimated 51% in April 2022 the question most people are considering is whether a new fixed tariff is a good option or not. It is one I have been asking myself.
Here is my dilemma.
My fixed gas tariff is due to end mid March 2022. I have to either take a new Octopus fixed tariff or I move over to the Octopus flexible tariff by simply doing nothing. Doing nothing sounds very tempting. By doing absolutley nothing my fixed rated will expire on the 20th March 2022. The price I pay per kWh of gas will increase from 2.94p a kWh to just under 4p a kWh. The issue is on the 1st April the energy price cap is due to increase. The Octopus Flexible tariff should then be roughly 6p a kWh. So in a matter of days after my Octopus fixed rate ends I will be paying double the price for my gas supply! 🤯
How do you know if you are on a price cap tariff?
I am sure there are thousands of people in the situation where they want to know if they should do something to secure a better long term energy deal. The first thing you need to know is are you on a price cap tariff? You are on the price cap tariff if;
- You’ve never switched tariff.
- Your cheap fix ended and you did nothing.
- Your energy firm has recently gone bust and you have been moved to another supplier.
- You opted for the Octopus Flexible tariff.
If the answer is yes to any of the above then you will be currently paying around 21p per kWh for electricity and 4p per kWh for gas. (It’s a rough figure but it’s close enough)
How much will your energy bill increase in April 2022?
If you are on a price cap tariff like the Octopus flexible tariff the unit price you pay for energy will rise in April 2022. How much obviously all depends on how much energy you use. The price you pay per kWh will increase by an estimated 50%. (It may be slightly more)
As an example, if you are currently on a tariff, such as the Octopus flexible tariff, which is protected by the price cap and you use the same amount of energy in April as you did in March your energy bill wil go up by around 50% in April 2022. A £100 energy bill in March will cost you roughly £150 in April.
If like me you come off a really cheap Octopus fixed tariff and roll onto the flexible tariff you will feel the effects even more after April.
The price increase for the new energy price cap hasn’t been released yet. This is all a bit of a guestimate but Martin Lewis is quite confident the increase will be around 51% and I agree.
Will the energy price cap increase again in 2022?
The simple answer is yes there is a possibility it will. The price cap may increase again in October 2022. No one knows what will happen in the next few months.
Without having a crystal ball it is very difficult to say either way. Russia is restricting the supply of gas to the UK and this is pushing up both gas and electricity prices. There are lots of issues with Russia and Ukraine which cause concern. Russia is restricting the supply of gas to Europe to put pressure on the respective governments. As a result, the wholesale energy market is difficult to predict.
Will sticking on the energy price cap be cheaper than taking an Octopus fixed tariff today?
Yes, being on a tariff protected by the price cap will be cheaper than a new Octopus fixed deal in the first half of 2022 unless the Octopus Fixed tariff drops in price.
The Octopus fixed tariff has been increasing over the last few weeks but if wholesale prices drop in the spring it will go down. You really need to watch this space and grab a deal if prices drop! If you have already fixed at a higher rate you can switch to the lower price tariff by emailing [email protected] It is really easy to do!!
|Compare Octopus 12 months fixed tariff energy prices. 👀||Electricity unit rate per kWh.||Gas unit rate per kWh.|
|21/01/22||34.63p per kWh🔻||8.55p per kWh🔻|
|15/12/21||37.08p per kWh 🔺||10.18 per kWh 🔺|
|09/12/21||33.65p per kWh🔺||8.77p per kWh🔺|
|02/12/21||31.23p per kWh🔺||8.11p per kWh🔺|
|24/11/21||28.75p per kWh🔺||7.47p per kWh🔺|
|Daily standing charge Electricity.||24.86p per day||24.86p per day|
|Daily standing charge gas.||26.10p per day||26.10p per day.|
Today the current Octopus Energy 12-month fixed tariff is 37.08p per kWh for electricity and 10.18p per kWh for gas. There’s a daily standing charge per day of 24.86p for electricity and 26.10p for gas.
UPDATE: The Octopus fixed tariff dropped in price, 21st January 2002, to 34.63p per kWh for electricity and 8.55p per kWh for gas!!
Estimated comparison between a new Octopus fixed tariff and the April 2022 price cap. (Octopus Flexible tariff)
|Octopus Fixed Price per kWh.||Estimated April 2022 price cap.|
|Electricity||34.63p per kWh.||31.5p per kWh|
|Gas||8.55p per kWh||6p per kWh|
|12 Months fixed tariff.||Yes||No|
The estimate is based on a 50% increase in the price cap. Currently, it is still cheaper to stick on a tariff capped by the energy price cap, such as the Octopus flexible tariff for the next few months. The issue is no one knows how much the energy price cap will rise by October 2022.
My gut feeling is that for the next few months you will be better off sticking on a tariff protected by the energy price cap unless you are an existing Octopus customer or prices drop and a cheaper Octopus fixed tariff becomes available.
Existing Octopus customers who have been with Octopus for more than 8 months can get a slightly cheaper deal on the Loyal Octopus tariff which is 27.59p per kWh for electricity and 8.47p per kWh for gas. The gas price per kWh is still higher than the expected new price cap but you could just take the Loyal Octopus fixed tariff for your electricity supply. It’s below the expected April price cap and is fixed for 12 months. The gas price is higher BUT it will be set in stone for 12 months and you don’t have to worry about a price increase in October. It’s a case of weighing up what is best for you.
If you own an electric vehicle and have a smart meter you may be in luck.
If you have a smart meter and an electric vehicle you should definitely consider the Octopus Go tariff !! (You could also consider the Intelligent Octopus tariff if you have a Tesla or own a Wallbox EV charger)
Octopus Go is a tariff designed for EV charging at home. The daytime rate is roughly in line with the predicted price cap after the April 2022 increase BUT it is fixed for 12 months. So the price will not increase again in October if the price cap should rise. You will also get 4 hours of off-peak charging at 7.5p per kWh. The off-peak rate isn’t limited to EV charging so between 00.30 and 03.30 you can fill your boots and preset lots of white goods to make the most of cheap electricity.
Back to my dilemma. Should I fix a new gas tariff now before the April price cap?
It is all a gamble I am afraid. I usually have a definite answer but I am going to gamble and roll onto the Octopus Energy flexible tariff which is protected by the price cap. My unit price per kWh of gas will double but if I take the current Loyal Octopus tariff it would almost treble in price! That being said even as I am typing this I am not quite sure.
I could turn my central heating off in April and get the kids to wear jumpers. We could only use gas for an hour a day to heat the hot water. I would have a guaranteed price of 8.47p for 12 months. This could take me through next winter avoiding any more rises if the price cap goes up in October 2022. Either way, it is going to mean bigger energy bills it’s just a case of trying to minimise the impact.
UPDATE 17/1/21: I am swinging towards fixing my gas tariff! The flexible tariff is cheaper BUT I really hate not to have a fixed energy price. Hmm…I am going to carefully watch the prices like a hawk!!
The Octopus fixed tariffs haven’t changed since mid-December when wholesale energy prices spiked. Maybe they will go down a little towards the end of the month. If I do fix my energy tariff I will be watching the Octopus tariffs and if they drop further I will switch to the cheaper one. The last time I did this it took less than 24 hours to get the deal.
If you are in a similar dilemma remember;
- You can switch tariffs at any time you don’t need to wait for your fixed deal to come to an end.
- There’s no admin fee.
- You can switch from a fixed tariff to a flexible tariff with Octopus. (I think other suppliers make you wait until your fixed term ends. You will need to check.)
On a plus, the planet is probably cheering as I will produce less C02. 😀🙊🌍
Where can you find the up-to-date Octopus Energy tariffs?
At the moment you can’t get a new customer online quote from Octopus. All the comparison sites are unable to provide any quotes either BUT you can find the current tariffs on the Octopus Energy website. You just need to scroll down through the list of current tariffs. Here is the link. Don’t click on “Request a quote” just enter your postcode and a list of current tariffs will be displayed below.
I keep my Octopus tariffs page updated each day so it’s quite easy to find out if energy prices have dropped and it is time to fix a deal.
Making a decision to fix or stick is so personal, you have to consider what is best for your energy needs now. So many peoples circumstances are different. I hope my post has helped.
It is important to remember you can switch to a new Octopus tariff at any time. It takes a quick email or phone call and it is done. So if prices drop you can switch to a cheaper tariff.