Octopus Energy has urged UK households to make one change before January to avoid a £1,738 charge.
Energy bills will rise by 1.2% from Wednesday when Ofgem’s new price cap takes effect, taking the typical household bill to £1,738 per year.
But Octopus says it remains the only large energy supplier in the UK to never have charged the full price cap, so customers that switch could make big savings.
The price cap limits the amount an energy supplier can charge for units of gas and electricity. It also impacts the standing charge, which is a daily cost per fuel type set by Ofgem.
The cap isn’t the absolute maximum price households will pay for energy as it is based on usage, so those that use more energy will pay more.
The cap is going up by 1.2% – or £21 – from the current £1,717 per year for a typical household in England, Wales and Scotland to £1,738, amounting to an extra £1.75 per month.
Ofgem has advised customers to shop around to bring their bills down and take advantage of increasing choice among suppliers, saying households could make savings of up to £140.
Octopus has said households can save money by switching to one of its tariffs as its prices are lower than the price cap and its standing charges are the cheapest standard tariff rates of any large supplier.
Octopus Energy founder Greg Jackson said: “There are a lot of ways we can help and we want to do so. And Octopus’ prices are lowest still, again, the lowest of all the big energy companies.
“Indeed, if your payments are currently enough to meet your consumption, we won’t need to put your payments up to cover these changes. And there are things you can do.
“Fixed tariffs are currently cheaper than the current prices, but also cheaper than these proposed prices for January. And we’ve got tariffs like Agile and Tracker that may enable some people to save money.”
Octopus adds that customers who set up a Direct Debit can automatically save a further £80 on average by setting one up.
Customers that don’t have a Direct Debit set up end up paying more as it creates more admin for suppliers, but Octopus says it doesn’t think it’s fair to make everyone cover the extra cost. Therefor it offers a cheaper rate to customers who choose to pay by Direct Debit, which costs the firm less to manage.
Any customers that make a change to how they pay their energy bills will then have their bills automatically adjusted, making a saving of £80.
The supplier explains: “Our Flexible tariff will have slightly different unit rates and standing charges based on your payment method. The £80 isn’t a flat discount for Direct Debit customers (or a charge on non-Direct Debit customers) – it’s the typical savings an average home could see over a year on the cheaper Direct Debit dual-fuel rates.
“If you change how you pay, our system will pick that up and adjust your rates automatically, so if you don’t have a Direct Debit right now, it’s super easy to access the cheapest prices. All you need to do is set up a Direct Debit online and we’ll do the rest.”
