Octopus revives Tracker tariff based on wholesale prices

Octopus Energy has relaunched its Tracker tariff which allows consumers to follow wholesale prices and tailor their usage accordingly.

The smart tariff is based on daily wholesale market rates, which means the price for energy can change each day.

Octopus claims this can save consumers money by shifting large amounts of their energy use to avoid expensive peaks.

The product had been closed to new sign ups for over a year to protect consumers when wholesale costs rose dramatically.

However, Octopus has reopened the scheme following Ofgem’s announcement that the price cap would be reduced by £1,200.

While customers signing up to the tariff should be prepared for wholesale prices to rise later in the year as demand grows, there is a maximum cap on ‘Octopus Tracker’ prices at 100p/kWh for electricity and 30p/kWh for gas.

Rebecca Dibb-Simkin, chief product officer at Octopus Energy Group, said: “The energy market is changing rapidly, and we believe it’s essential for consumers to have the tools to harness this change for their benefit. We’re glad we can bring our popular Tracker product back to the market, allowing customers to become an active part of the future energy system once more.

“By creating a transparent tariff that allows customers to access wholesale rates and plan their energy consumption accordingly, we’re empowering customers to become actively and directly involved with the energy market, and see how prices rise and fall.”

Customers can register their interest to join the product and will be added to the waiting list, with the product due to open on 1 July. The product has no exit fees but once switching away from Tracker, customers cannot sign up to it again for another nine months.

The lowering of the price cap is expected to lead to an increase in competitive tariffs in the coming weeks and months.

It is predicted to lead to an increase in consumers switching energy provider following months of stagnation. The launch of the Energy Price Guarantee (EPG) in October last year eroded what was left of price competition in the market, further dampening appetite for switching. Over the whole of 2022 switching activity was down 73%.

While competition in the market is widely welcomed there have been pleas for caution. Speaking at Utility Week’s Customer Summit in March, So Energy executive director Charlie Davies urged retailers to avoid a “fight for the lowest tariff” when pricing competition returns.

Davies comments echo sentiments made by EDF managing director Phillipe Commaret who previously told Utility Week that competition is not yet in the best interest of customers.