Octopus Tracker Tariff is it still worth it?
With the January 2025 Energy Price Cap rising by 1% and fixed rates offering some protection from further predicted price cap increases in April 2025, is the uncertainty of the Octopus Tracker tariff still worth the risk this winter? I will attempt to give you my opinion as an existing Octopus Tracker tariff customer.
The Octopus Tracker tariff is the only energy tariff in the UK that truly follows wholesale energy prices. Every day Octopus updates the price you pay for your electricty and gas using a preset formula. The formula and the standing charge remain fixed for 12 months but the rates change daily depending on wholesale energy prices.
Understanding the Octopus Tracker Tariff: How It Works and How It Differs from the Energy Price Cap
The Octopus Tracker tariff differs because it’s not linked to Ofgem’s Energy Price Cap. Instead, it’s directly tied to real-time wholesale energy prices, which change daily at midnight. This means the price per kWh with the Octopus Tracker tariff fluctuates based on the global energy market. If wholesale prices go up today, you’ll see an increase almost immediately, but you’ll also benefit when prices drop.
In contrast, Ofgem’s Energy Price Cap is updated every three months and is based on past wholesale prices, not current ones. For example, the January 2025 price cap increase reflects prices from September to November 2024. This period of assessment for the January Energy Price cap has now ended and today’s wholesale prices will be used to set the April 2025 price cap.
What to Expect as a Tracker Tariff Customer.
If you’re on the Octopus Tracker tariff, it’s important to pay attention to future wholesale energy price predictions rather than relying on the Ofgem price cap. For instance, higher wholesale prices this autumn have resulted in a 1% increase in the January 2025 price cap.
Looking ahead, analysts are predicting a further 3% increase in the price cap for April 2025, reflecting the slightly higher prices now being felt on the wholesale market. It’s the predictions for April you should look at in order to assess how the tracker tariff may perform now.
Keep an eye out for an Octopus Tracker tariff formula change.
Octopus use a formula to work out the price you pay on the Octopus Tracker tariff. As you take on more of the risk of buying your energy as it fluctuates each day Octopus passes on some rewards.
On the 31st of December 2024, Octopus launched the December 2024 v1 of the Octopus Tracker tariff. If you switch to Octopus Tracker after the 30th of December or if your fixed period ends, you will go on to the latest version of the Octopus Tracker Tariff, December 2024 v1.
Thankfully the formula used on December v 1 of the Octopus Tracker tariff results in the price you pay for your electricty and gas being slightly cheaper than the previous version.
How much will I pay on the Octopus Tracker tariff?
If you switch to the Octopus Tracker tariff now or if your tracker tariff is up for renewal after 12 months you will be on December 2024 v1 of the Octopus Tracker tariff.
Octopus Energy Tariffs in South Wales (1st January to 31st March 2025)
Flexible Tariff:
- Electricity: 24.49p per kWh, with a standing charge of 62.06p per day
- Gas: 6.45p per kWh, with a standing charge of 29.77p per day.
Tracker Tariff (December 2024 v1, 19th January 2025)
- Electricity: 27.13p per kWh, with a standing charge of 62.06p per day.
- Gas: 6.72p per kWh, with a standing charge of 29.77p per day.
Choosing the right Octopus energy tariff can seem complicated, especially when rates fluctuate. Here’s a brief comparison of Octopus Energy fixed, flexible and tracker tariffs in South Wales as of the 17th of January 2025, to help you decide which might suit your needs best:
- Flexible tariff: Cheaper than the Octopus Tracker tariff today.
- Octopus 14 Months Fixed: Cheaper than the Flexible Tariff providing stability for the year.
- Tracker Tariff: Consider the average monthly kWh price, not just the daily rates.
What the future might hold in 2025 for the Octopus Tracker tariff.
I think the Octopus Tracker tariff is still worth switching to as long as you are not scared of risk. We have already been through the wholesale prices that have caused the 1% increase on the January 2025 price cap and all versions of the Octopus tracker tariff have on average faired well against them. There is another predicted increase of at least 3% for the price cap in April 2025 and we are experiencing those prices now. Yet despite the increase you can still save money on the Octopus Tracker tariff compared to the Octopus Fixed or the Octopus Flexible rates but it is getting tight for gas!!!
@sarah_go_green Replying to @Ali Hussain @Octopus Energy ♬ original sound – sarah_go_green
As long as you are prepared to hold your nerve and watch prices the Octopus Tracker tariff could be a fairly easy way to save money on your energy bill this winter. However, nothing is certain and there are several factors such as the conflict in the Middle East and the planned maintenance work for some pipelines that you need to take into consideration.
Predictions indicate a possible fraction of a percentage price reduction in the Energy Price Cap in July 2025 and the Octopus Tracker tariff will feel this downward trend first during the March to May 2025 Ofgem assessment window.
Octopus Tracker tariff price spikes.
Over the last two weeks, prices have spiked. It is all to do with high gas prices and not a lot of wind. There is a bit less nuclear than usual and imports and running lower. You have to look at the average unit price that you are paying before deciding if to stick or twist with the tracker tariff.
I often get asked what I would do but this is so personal as you could well get gambler’s remorse from switching away for the security of a fixed tariff and then discovering prices have settled down. Remember it is the overall average unit price that matters not the random one-off price spikes that may nudge your average rate up but it won’t necessarily make it more than a tradional Octopus tariff.
You can hop off the Octopus Tracker anytime but can’t return for 9 months. If you’re into making savings following wholesale rates again, try the Octopus Agile for electricity. You don’t need the same tariff for gas and electricity, you could fix your gas for 12 months while keeping your electricity on the Tracker tariff. Just contact Octopus to sort it out.
Will the Octopus Tracker tariff formula change in January 2025?
On the 31st of December 2024, the Octopus Tracker tariff formula changed and it became slightly cheaper than the previous version October v1. However, the standing charge changed and the electricty went up so it is now in line with all the other Octopus tariffs.
No one knows if or when the Octopus Tracker tariff formula will change again in 2025. If you switch to the tariff you will remain on your current formula for 12 months. This element of the tracker tariff is fixed along with the standing charge.
I suspect Octopus reduced the formula prices ready for January 2025 as the Tarcker tariff has always been marginal in terms of profit yet its popularity is increasing. It gives customers the benefits of short-term dips when there are lots of renewables on the grid but unlike Octopus Agile it’s much simpler to manage as there’s just one flat rate for the day.
Now that more customers are switching to smart tariffs and are becoming more prepared to change when they use energy to get cheaper rates I suspect Octopus want to make greener tariffs such as Octopus tracker tariff more attractive.
Is the Octopus Tracker Tariff still worth switching to?
When Octopus updated the formula of the Octopus Tracker tariff in October 2024 I first thought that the increase in the formula combined with the recent wholesale energy price rises would make the Octopus Tracker tariff more one to watch than to switch to. The rates for gas have been so close to the Octopus Flexible rates that the risk of price increases I thought would deter customers from switching especially when the Octopus Fixed tariff has quite competitive rates right now. However, there is an appetite to beat the system and I have noticed more of a determination to stick with the tracker tariff than expected
Now that the Octopus Tracker tariff has had the price of its formula lowered it’s going to be even more attractive hopefully in 2025. We just need gas wholesale prices to start falling!!!
The Octopus Tracker tariff can be great, but you need to watch for sudden price spikes. You should check if switching to a fixed or standard tariff makes sense, but you don’t need to decide quickly. Focus on the monthly average cost for gas and electricity, not daily rates.
So, yes the Octopus Tracker tariff could still work out cheaper than the January 2025 Energy Price Cap but it does feel more of a gamble than a certainty in respect of the gas element.
It is easy to switch away from the Octopus Tracker tariff. You simply email hello@octopus.energy but remember you can’t go back to the tariff for 9 months.
About the author: I’ve Been a Happy Octopus Energy Customer for 6 Years.
I’m Sarah, and as a mum of 3 daughters, I want to save money and do right by the planet. This led me down a rabbit hole of researching tariffs, smart meters, and renewable options.
You can find me on X and TikTok where I connect with around 10,000 followers looking for practical ways to electrify their homes and reduce energy bills.
Feel free to follow me Sarah_Go_Green and join the conversation – I’d love to hear from you!
I’m also featured on the Octopus website and their YouTube channel as a solar customer. I’ve been on BBC News, and Radio Wales, published in the Telegraph for owning part of a wind turbine and had a feature in Bloomberg.
I genuinely want to help you understand your options and make smarter energy choices. It’s that simple, I have become very geeky about my home energy and I can help you too.
Another post by Sarah you may find of interest;
- Full Octopus Agile Review.
- Intelligent Octopus Go – The most popular EV tariff in the UK.
- Are Octopus energy prices going down?
- To fix or not to fix your energy tariff with Octopus Energy.
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