Is there such a thing as a cheap Octopus Energy tariff?

One of the first questions most people ask is what is the cheapest energy tariff available right now? I am with Octopus Energy and working out which is the cheapest Octopus Energy tariff does take some thinking.

It is a good question. Everyone wants to try and get their energy bills down but in the last 12 months so much has happened. When Russia invaded Ukraine the prices of wholesale energy jumped much higher than anyone could have predicted. This has had a knock-on effect on domestic energy tariffs available in the UK.  So finding a “cheap” energy deal is no longer that straightforward.

Energy Prices over the last 12 months.

Just 12 months ago you could sign up for a 24-month fixed Octopus tariff. It would have cost around 16p a kWh for electricity and 3p per kWh for gas. Today, 18th July 2022,  if your looking to switch to Octopus Energy the cheapest traditional Octopus Energy fixed tariff for electricity is 60.55p per kWh and an eye-watering 18.11p per kWh for gas. Both tariffs are now 12 months contracts.

According to Ofgem the average UK home with 2.4 people uses 8 kWh of electricity and 33 kWh of gas each day. So just a year ago the average home would have expected to pay £1.28 for electricity and 0.99p for gas. Totalling £2.27 a day. This is based on the figures above, 16p per kWh of electricity and 3p per kWh of gas.

Today, 18th July 2022, the Octopus traditional fixed tariff will cost £4.88 per day for electricity and £5.98 for gas. This is based on 60.55p per kWh for electricity and 18.11p per kWh for gas. I have used the Ofgem average UK home consumption figures again. The total is £10.86 a day compare to £2.27 a day a year ago!

To make matters worse this doesn’t even take into account the increased standing charge! The standing charge for electricity has almost doubled. It was around 25p a day, regardless of how much energy you used and it is now around 50p per day. So even if you keep everything switched off if you have an electricity supply to your home you will be paying around 50p a day or £15 a month just for electricity.

Once you have completed your switch to Octopus there is a cheaper fixed called the Loyal Octopus tariff. This is currently 49.88p per kWh for electricity with a standing charge of 47.88p per day and 15.69p per kWh for gas with a standing charge of 27.22p per day.

Be aware there is more than one type of fixed tariff with Octopus Energy!

The traditional Octopus fixed tariff quoted above is just one of the fixed tariffs available. . All domestic energy suppliers have a traditional fixed-rate BUT Octopus also has smart tariffs. The Octopus smart tariffs are also fixed for 12 months. For me, this is one of the areas that makes Octopus stand out from the crowd.

The smart tariffs take a little more thought but they can be a great way of bringing the average price you pay per kWh down. They are also great for the planet! So even after the energy crisis is over they can continue to help us on the road to NetZero. It really is a win, win and Octopus is leading the way!

We all managed to quickly adapt to working at home and using Zoom. Maybe, we should all try to make changes to help the planets well as your pocket. Smart tariffs can do both!

What does Martin Lewis have to say?

Martin Lewis at the start of the energy crisis advised consumers to stay on the energy price cap.  The price cap is fixed for 6 months. Martin said if your fixed deal comes to an end do nothing. Unfortunately, as wholesale energy prices have continued to rise fixing your tariff may have been the better option. The energy price cap has skyrocketed!

Martin Lewis could never have predicted wholesale energy prices would rise so dramatically! He is now taking a different approach and is advising customers to decide for themselves if taking a fixed is the best option. I have never seen him lost for words before BUT no one knows what will happen.  Taking a crazy fixed price may seem like a good deal in 6 months’ time BUT who can afford to pay such high prices?

The October energy price cap is now predicted to rise by a staggering 65%. I am a big fan of Martin Lewis and like everyone else I read his recommendations but at the moment he is saying there is very little you can do to avoid your energy bill going up.

October 2022 Octopus Energy price cap rises.

The standard variable tariff, known as the Octopus Flexible tariff, is capped by the energy price cap. Octopus took the decision to make sure that they were below this price. So the Octopus Flexible tariff is £50 below the April energy price cap. This makes it one of the cheapest tariffs available.

In October 2022 energy price cap looks set to rise by around 65%. Electricity could then increase from around 27p a kWh to 38p a kWh.  Gas which is currently capped at around 7p per kWh could rise to around 12p per kWh in October.

It is impossible to quote the exact figures as the 6 months period the energy price cap is based on hasn’t finished.   It is also difficult to know how the 65% will be split if indeed it is 65%.

The price increase isn’t split evenly between gas and electricity. One may go up more than the other. We will just have to wait and see.

I am estimating a very rough 38p per kWh for electricity and 12p per kWh for gas come October 2022 (as a very rough guide) BUT it is important to note that there is a predicted further 4% increase in January 2023. 😩 My gut feeling is that electricity will be over 40p per kWh.

Deciding if to stick with the Octopus Flexible tariff or any standard variable tariff versus taking out a new fixed tariff is a matter of personal choice. You have to take into account your own financial situation and energy needs.

Octopus Energy changing the way we consume energy.

If all traditional fixed deals are now above the predicted October 2022 energy price cap you may think it is best to just stick with that but thinking outside the box will save you money. Octopus are great at giving customers great ways to save money and help the planet.

Could changing your behaviour reduce your home energy bill?

The simple answer is yes. The most basic way to save money is to just switch off your energy. By using no energy you won’t get slapped with a massive bill but there are other ways you can reduce your costs too.

If you have a family, as I do, just wild camping in your home isn’t going to be an option. The kids need a warm meal and clothes need to be washed. So what can you do?

The first thing I would suggest if you are an Octopus Energy customer or are thinking of switching to Octopus Energy is a time-of-use tariff known as smart tariffs.  You will need a smart meter for most smart tariffs but not all. You can still switch to some really great electric off-peak tariffs or tariffs which change half hourly or daily based on wholesale energy prices.

I would suggest you take a look at;

I can hear so many people scream but I don’t own an EV and I haven’t got solar panels. Being able to afford lots of energy-saving devices is great but if you are just getting by then it is not an option.  However, with Octopus you can still save money on a smart tariff just by changing your behaviour. Plus there are still Octopus smart tariffs available even without a smart meter.

Octopus Smart tariffs without an EV or solar panels.

For those without an EV look at the Octopus Agile tariff. It is a 12-month fixed tariff which is capped at 35p per kWh for electricity.  On the Agile tariff, prices are announced a day ahead. Your energy price will change every 30 minutes throughout the day. If you plan ahead you can work out when would be the cheapest time to prepare your meal or turn on the washing machine.  It takes some dedication but if you invest a few pounds in some timers or if your washing machine or white goods have delay functions built-in they really can save you a lot of money.

If you hustle and change when and how you use electricity then you can bring the price per kWh down to below the price cap. I manage to use around 57% of my energy off-peak. I pay 7.5p per kWh off-peak on the intelligent tariff and 35p per kWh peak. By load shifting when I use energy my average price per kWh drops to around 16p per kWh! This is well below the energy price cap.

Octopus Smart tariffs without a smart meter.

Octopus Tracker tariff.

If you don’t have a smart meter the Octopus Energy Tracker tariff is currently on version 3. The tariff tracks wholesale energy prices and each day the price you pay for either gas or electricity changes. This may seem a little risky BUT at the moment version 3 of the Octopus Tracker tariff is capped at 11p per kWh for gas and 40p per kWh has electricity. Remember the cap is the most you will pay per kWh. Yes, prices may rise so it’s always on the cap but they may not. If they drop then the average price you pay for electricity or gas will be below the capped target price.

I have no idea when they will change to version 4 of the Octopus tracker tariff but at the moment it is capped at 11p which is very attractive. Just switch off the gas as much as you can in the summer and keep the higher rate for the winter. By the time you come to use more gas the energy price cap will probably be above 11p per kWh anyway! So it really is well worth fixing a 12 months deal on the tracker tariff now while it is still available.

Here is an example of the gas tracker prices for the last 7 days. The figures are based on the prices for South Wales. They may vary slightly based on your location.

Octopus Gas Tracker Tariff is NOW JULY V1. Price per kWh.
MAX PRICE 16P PER KWH.
10/08/2212.085p
09/08/2211.571p
08/08/2211.918p
07/08/2211.382p
06/08/2211.382p
05/08/2211.099p
11/08/2210.847p

Ideas how you can save money on your energy bill.

As well as looking at your energy deal you could look at how you use energy. If you have to put the oven on maybe batch cook. Instead of cooking one meal cook 3 and freeze them. I have been doing this for the last few weeks and it really does bring your energy bill down.

You can also consider cooking meals in a slow cooker.  A slow cooker doesn’t have to be fancy. Mine cost around £20 from Amazon and produces really cheap affordable meals with every little energy. I make stews or pasta sauces in the slow cooker and then keep them refrigerated for a few days. Then the oven is used even less in the week. In the current energy crisis, this is fantastic! The oven really burns through lots of kWh!

I can’t quite believe we have reached this position in the cost of living crisis but we have. The £400 the government will pay to all energy users in the winter should have helped BUT in reality when they decided on the £400 the energy price capped looked like it would rise by 54% it is now set to rise by 65%. The £400 will be eaten up by the extra increase!! So most people will have to find ways to cook a warm meal and keep clean and warm without getting into a massive amount of debt.

I am seriously looking at an electric blanket for the winter. They are cheap to run and if you don’t want to heat the whole house will defiantly keep your energy bill down.