If you’re an Octopus Energy customer or willing to switch to the firm, you may be able to save on your energy bills with its Octopus Tracker tariff. We’ve all you need to know on how it works and how it stacks up.
Right now most households are still paying their energy supplier’s standard rate, which is protected by the energy price cap. This has been the cheapest option for most since the energy crisis began two years ago, but now most suppliers are offering fixed gas and electricity deals again – our energy comparison guide takes you through what you need to consider.
Octopus Energy has also relaunched its ‘Tracker’ tariff, which could save you money if you are happy to monitor daily price changes. It won’t be right for everyone, so here’s what you need to know.
What is the Octopus Tracker tariff and who can get it?
The Octopus Tracker is pegged to the wholesale price of energy, which is the rate suppliers pay, with prices changing on a daily basis.
This means the price you pay for each unit of energy can change every single day, but it does mean households can benefit from cheaper rates immediately (if prices go down), rather than waiting for any change in the price cap to kick in further down the line – see will energy prices go down?.
To get it:
- You need to be an existing Octopus customer to apply. If you’re already with the firm it’s simple. If not, you’ll need to switch to the Octopus standard variable tariff first.
- You will need to have a working smart meter. This is so your smart meter can track your daily use. If you are already an existing customer, but don’t have a smart meter, you can ask Octopus to fit one for you for free.
- You’ll need to contact Octopus to sign up. You can do this online at Octopus or by calling or emailing the supplier.
How does the Octopus Energy Tracker work?
The Octopus Tracker is a variable tariff, which tracks wholesale prices. This means the price you pay for each unit of energy can go up or down daily. As well as being charged the unit rates for any energy you use, you also pay a daily standing charge for gas and electricity.
Energy prices will be updated just after midnight each day, which Octopus says is based on an “independently published wholesale market price”. Households will then be able to see the wholesale price they will pay, compared with the standard variable rates, on their smart meter display.
The rates will vary depending on where you live – just like standard tariff rates. This is also the case with the daily electricity standing charge, although the gas standing charge is fixed.
Is the Octopus Tracker protected by the energy price cap?
The tracker tariff is not protected by Ofgem’s energy price cap, as it only relates to standard default tariffs. This means there is a risk that bills could spiral higher than the limit set by the regulator.
However, there is a built-in Price Cap Protect facility. This means the maximum you can pay per unit of energy, if wholesale prices soar, will be 100p per kWh for electricity and 30p per kWh for gas.
This is far in excess of the unit price under the October-December energy price cap, where for comparison, households are paying an average of just under 27p per kWh for electricity and 7p per kWh for gas. And these rates will soon rise as the energy price cap will increase by 5% in January
Can I save money with the Octopus Tracker?
There’s no simple answer to this as it depends on the wholesale rates at any given time, along with where you live, as this affects the price you pay.
Octopus says that over the last year, an average household could have saved 4% off their energy bills with the Tracker tariff, compared with the energy price cap.
As the price cap only changes every three months, it means there’s a delay between changes in the wholesale price and the price we pay for our energy. The Octopus Tracker tariff tracks the wholesale price on a daily basis, so you see any rise or fall in prices immediately.
On the plus side, if the wholesale energy price falls, you stand to benefit immediately, in the form of cheaper prices. But on the flip side, if wholesale prices start to rise, you’ll pay more for each unit of energy. So if you can’t afford for prices to rise further, you are probably best off staying on a standard tariff or looking for the cheapest fixed deals.
We’ve done a rough comparison comparing the current ‘average’ Octopus Tracker rate over the last 30 days across Eastern England (until 22 November) with the cost under the current energy price cap.
|Energy Price Cap rates from 1 October to 31 December 2023||Average Octopus Tracker rates for 30-day period|
|Gas||Unit rate: 7p per kilowatt hour (kWh). Standing charge: 30p per day||Unit rate: 5p per kWh. Standing charge: 27p per day|
|Electricity||Unit rate: 27p per kWh. Standing charge: 53p per day||Unit rate: 19p per kWh Standing charge: 37p per day|
While Tracker has been cheaper than the price cap, rates could spike this winter
It’s worth noting that Octopus has warned customers to expect higher rates over the winter. It said: “Over the warmer months, prices tend to be lower, and we expect them to increase – likely double – when the heating comes on and the sun starts setting earlier.”
Can I leave Octopus Tracker if I change my mind?
There’s no fixed term contract and you can leave at any point, penalty free. All you need to do is log into your account and opt to ‘change my tariff’. However, Octopus warns that it can take up to two weeks to switch customers to another tariff.
If you do take the decision to leave the Octopus Tracker, say if the wholesale energy price shoots up, but you later want to rejoin, you’ll have to wait nine months before doing so.