Stick or fix your energy tariff before April 2022?
With the energy price cap due to rise by an estimated 54% 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 7p a kWh and electricity 28p per 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 tariffs.
- 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 to approximately 7p per kWh per unit of gas ad 28p per kWh unit of electricity. How much obviously all depends on how much energy you use. The price you pay per kWh will increase by 54%.
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 54% in April 2022. A £100 energy bill in March will cost you roughly £154 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 was announced today, 3rd February 2022.
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@example.com. It is really easy to do!!
|Compare Octopus 12 months fixed tariff energy prices. 👀||Electricity unit rate per kWh.||Gas unit rate per kWh.|
|09/08/22||70.76p per kWh🔺||19.77p🔺 per kWh|
|16/07/22||60.55p per kWh🔺||18.11p per kWh🔺|
|09/07/22||46.9p per kWh🔻||15.59p perkWh🔻|
|08/07/22||54.46p per kWh🔺||17.93p per kWh🔺|
|21/04/22||41.08p per kWh 🔺||11.82 per kWh🔻|
|Daily standing charge (from 25/03/22)||47.88p per day🔺||27.22p per day🔺|
|Daily standing charge (up to 24/03/22)||24.86p per day||26.10p per day.|
Today, 3rd February 2022 the current Octopus Energy 12-month fixed tariff is 37.20p per kWh for electricity and 10.13p per kWh for gas. There’s a daily standing charge per day of 24.86p for electricity and 26.10p for gas.
Comparison between a new Octopus fixed tariff and the April 2022 price cap. (Octopus Flexible tariff)
|Octopus Fixed Price per kWh.||April 2022 price cap.|
|Electricity||70.76p per kWh||28.29p per kWh|
|Gas||19.77p per kWh||7.43p per kWh|
|12 Months fixed tariff.||Yes||No|
|Prices vary slightly depending on geographical location.|
Prices vary depending on your geographical location. You should also be aware standing charges are also going up. In my area, that means an increase of around £6 a month just on the standing charge!
The April energy price cap will rise by 54%. 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. Who knows what will happen if Russia invades Ukraine!
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 higher than the April price cap 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 if I gamble and roll onto the Octopus Energy flexible tariff which is protected by the price cap I will pay less than the next fixed but only until October. My unit price per kWh of gas will double but if I take the current Loyal Octopus tariff it would almost treble in price!
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 8.94p 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.
My energy use peaks in the winter.
As this chart shows, I use very little gas during the summer months but it increases dramatically when I turn the heating on in October. The bar chart is taken from my Octopus Energy dashboard.
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 and if I do fix and prices drop I will email Octopus and take the cheaper tariff!!
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.
Is there going to be any government help?
From what I have read today the government aims to fund a flat £200 rebate loan for electricity on the 1st of October. There is no mention of Gas! This will be repaid back at £40 a year for 5 years. How this will be implemented we are yet to find out.
My concern is that the April energy price cap isn’t a 54% increase on both gas and electricity prices. It seems more like a 75% increase in gas and a 33% increase in electricity. Plus the help being offered is for electricity only. When we all turn on our central heating, unless you have a heat pump, our gas bills are going to skyrocket next winter.
I may be wrong about the government help being limited to electricity but I am sure we will find out more today and I will update this blog post.
Update 3rd March 2022
I made the decision to take a fixed tariff for my gas supply with Octopus Energy. I would pay less if I did nothing and let Octopus put me on their default tariff which is the Flexible Octopus tariff but I am really worried about how the war in Ukraine will impact energy prices, in particular my gas tariff.
Martin Lewis has advised people that they will pay less if they stay on the energy price cap BUT if prices keep soaring the energy price cap may rise a lot more than 20% in October. No one has a crystal ball so it is really difficult to predict what will happen in the months to come.
October 2022 price cap predictions.
The Cornwall Insight yesterday increased its forecast for the energy price cap in October 2022. Martin Lewis also uses this data but it has increased since his latest advice this week. The new forecast predicts a £929 rise in the October price cap. This is on top of the April price increase. If the prediction is correct the new energy price cap in October will increase from £1971 to a whopping £2900 a year!
If the predicted price increase is shared equally between gas and electricity we could see gas prices being capped at roughly 11p per kWh and electricity at 42p per kWh in October. The increase, however, will not be equal. In April gas prices took the biggest preparation of the 54% energy price cap increase. This is why I am really worried about my gas tariff. It would be well over 11p a kWh if I stayed on the
energy price cap. Some analysts are even saying that the energy price cap could reach over £3,200 a year on today’s news!
The Cornwall Insight also predicts a drop in the price cap in the summer of 2023 which is at least light at the end of the tunnel but that once again could change!
It is a really personal decision what you should do in terms of your energy tariff. No one can tell what will happen. I was worried about Ukraine last month but never envisaged they would really invade. It is heartbreaking! Just remember the energy prices can go up as well as down. If you fix your Octopus tariff remember you can switch to a new tariff at any time. I hope this information has helped. Stay safe! 💚
8th March 2022
Prices have increased today please see my Octopus tariffs page.