A MAJOR energy supplier is re-launching a popular tariff within days.
Octopus Energy’s “Tracker” tariff will be available to all new and existing customers from Friday, July 7.
EPACustomers will no longer have to join a waitlist for a chance to join the Octopus Tracker[/caption]
The tariff offers customers gas and electricity prices equivalent to wholesale costs.
This means that the amount you pay can change each day, depending on what’s happening in the energy market..
It differs from the standard varial tariff (SVT) which has its prices capped by Ofgem.
Right now, 29million customers on the SVT pay roughly 30.1p per kilowatt hour (kWh) for electricity and 7.5p per kWh for gas.
But in the last 30 days, thousands of customers already on the Octopus Tracker paid a maximum of 20.7p per kWh for electricity and 4.49p per kWh of gas.
At one point in June, unit prices even dropped to just 8.14p per kWh for electricity and 3.54p per kWh for gas.
This is because wholesale energy prices have been substantially cheaper while the weather remains mild and demand for gas falls.
But if wholesale prices rise, you could end up paying more than price-capped tariffs.
Customers will need to be quick if they want to sign up to the Octopus Tracker because spaces are limited to just 50,000 customers.
When this limit is reached, the supplier will close the tariff to new customers.
But a spokesperson for Octopus Energy told The Sun more customers might be accepted after this limit is reached.
Over the last year, an average household on the Octopus Tracker would have paid 4% less than if they were on an SVT, according to the supplier.
But savings like this during the warm summer months could still be outweighed by higher wholesale prices of gas and electricity in the colder winter months.
Natalie Mathie, energy expert at Uswitch.com said: “While this might be a good deal at the moment, as wholesale prices are lower than they have been, it is important to note that these prices can go up as well as down and will change day to day.
“If prices do go up, then bills will rise too — and the maximum limit for this tariff is allowed to be much higher than the energy price cap.
“Thankfully this tracker does not have exit fees, so customers can leave at any time without a financial penalty, although it can take a few weeks to switch to a new tariff.”
There is a cap on how much you’ll be charged on this tariff – with a maximum daily price of £1 per kWh for electricity and 30p per kWh for gas – but it’s still far above the rates on standard tariffs.
Kara Gammell, finance expert at MoneySuperMarket, said: “As your bills are likely to fluctuate it’s important to weigh up if short-term savings outweigh the potential of longer-term price rises.”
How do I sign up and can I change my mind?
If you’re an existing Octopus customer and have previously signed up to the tracker tariff waitlist, you’ll automatically be moved onto the tariff by Friday, July 7.
The supplier will also backdate any charges to July 1 for those who don’t get automatically switched until July 7.
From Friday, Octopus will remove the waitlist and all new and existing customers will have the chance to sign up to the tracker tariff.
Existing customers will be able to do this by logging into their energy dashboard on the Octopus Energy website.
New customers wishing to switch to Octopus Energy will need to sign up to its Flexible Energy Tariff first.
They can then sign up to the Tracker Tariff when their online account is set up, as described for existing customers above.
You’ll also need to have a smart meter to be eligible for the Octopus Tracker tariff.
If you change your mind and no longer wish to be on the Octopus Tracker, customers can move back to the standard variable tariff without facing a charge.
But this can take up to two weeks during which you could be paying higher prices if wholesale costs are high.
And after leaving, you won’t be able to return to the tracker tariff for nine months.
What other similar tariffs are available?
Octopus Energy also allows new and existing customers to switch to its Agile tariff.
Like Octopus Tracker, Agile customer prices are set by wholesale rates.
However, energy prices change half-hourly instead of once per day.
Agile is also the only smart tariff in the UK that passes “negative ” prices onto customers.
Suppliers are sometimes paid to take energy from the grid when supply exceeds demand.
Only yesterday, Octopus Agile customers were offered eight hours of negative prices.
It meant that the supplier paid customers up to 20p for every kWh of electricity they used.
However, like the Octopus Tracker, unit prices could shoot up above the levels capped by Ofgem in the colder months when demand rises.
Agile customers are protected by Octopus’ “Price Cap Protect” but again, it’s important to weigh if any short-term savings are worth it if prices are set to rise in the future.