SIMON LAMBERT: My bills will double as my fixed deal ends and the energy price cap jumps 50%, but do people like me have any real options?
- Energy price cap rises soon after my fixed energy deal ends in mid-March
- Letter of options from Octopus included a fix costing almost £5,000 a year
- New price cap would take my bills from £1,800 on the fix to £3,600 a year
- But is there any point trying to find a fix? Below are the energy options explained
I knew it was coming but that didn’t make the bad news from Octopus much better when its email about my fixed rate energy deal ending arrived.
As with many other people, I am staring down the barrel of a massive increase in my energy bills – and coming off a fixed rate compounds the issue to deliver serious bill shock.
By way of illustration, one of the options – one I’m not going to take – is a fix that would see my energy bills rocket from about £1,800 a year to almost £5,000.
And it’s worth noting that I don’t live in a particularly big house, have the heating on very high or all the time, I just live in a not very energy efficient house that’s barely changed since it was built in the 1960s.
So, what am I going to do? I’ll explain my options and plan, which may help others in a similar position.
Bill shock: I knew the email from Octopus was going to arrive but that didn’t soften the blow of the cost of moving from a fixed rate deal that’s ending to the new energy price cap
The Octopus email laid out the potential costs when my fixed rate deal ends in mid-March and gave me three options, none of which looked particularly appealing.
Of two 12-month fixed rate deals offered, one Octopus 12M Fixed was forecast to cost me £414 per month, while the other was a special Loyal Octopus offer that dragged my estimated monthly cost down to £367.
To put this in perspective, I currently pay about £150 a month.
Perhaps worried that I might try a counter-demand with an injury claim for falling off my chair, Octopus didn’t give me an estimated annual cost for these.
Instead, it left me to do the simple maths myself. I managed not to fall over but did wince: the standard 12-month fix comes out at an estimated £4,968 annually, whereas the special loyal customer rate racks up to a potential £4,402 annually.
Those were options one and three in the email, respectively.
I’ll admit to being slightly mystified as to why I was offered option one when further down the email I could fix my energy for the exact same duration, with the same conditions and same 100% renewable electricity, for about 11% less but maybe some crazy people like to pay more.
There was another choice though, option two: ‘Do nothing’.
This had an estimated monthly cost of £199.78 and involves switching to ‘our always good value variable tariff: Flexible Octopus’.
With an estimated annual cost of £2,397 a year, there was no need to get the calculator out to work out this is much cheaper.
But you do need your wits about you if you get a communication like this from your energy supplier, because my Octopus email wasn’t quite painting the full picture.
For those not in the know, it’s important to note that that although the email fails to mention it, this is the energy price cap tariff, prevented from rising above a certain level by the cap set by Ofgem twice a year.
But the energy price cap is about to go up, because gas and electricity prices have rocketed and industry-wide estimates suggest a rise of 50 per cent.
This would take the average dual fuel bill from £1,277 a year to £1,925, according to analysts at Cornwall Insight.
My ‘Do Nothing’ option estimate for the next 12 months of £2,400 is wildly out… if the price cap rises as expected, I’ll be paying £3,600 per year
Considering how widely expected this is – and that Octopus’s boss Greg Jackson has been online, in print and on TV and radio talking about it – you might figure that it would get factored into estimates sent out to customers.
A phone call to Octopus last week to ask about my projected bill revealed that no, it hadn’t been.
So, my ‘Do Nothing’ option estimate for the next 12 months of £2,400 is wildly out. My deal ends on 14 March and the price cap goes up on 1 April; I only get two weeks of the prices quoted.
If the price cap rises as expected, I’ll be paying an estimated £300 per month, or £3,600 per year.
That means my energy bills, from current fix to new price cap, are about to double. Ouch.
What will I do? The old advice would have been switch, but there is no longer any meaningful choice.
An energy comparison of the limited deals on offer shows that every single fixed rate on offer to me is at least 80 per cent more expensive than the current price cap and 20 per cent more than the new one is expected to reach.
I’d simply be locking myself into overpaying for months and even if the price cap goes up again next autumn – as it very well may do – I’d still be lucky to break even.
My plan is therefore to do nothing (and make sure that our energy inefficient 1960s home leaks much less energy when we eventually refurbish it).