Exclusive:
The head of Octopus Energy says it is taking a £120m hit by charging less than the limit allowed under regulator Ofgem’s price cap
The boss of one of Britain’s biggest energy suppliers has called on rivals to charge customers below the maximum they’re allowed.
Regulator Ofgem’s price cap for 27 million households jumped by 10% to an average £1,717 a year from October 1. While it is called a cap, most suppliers in reality have whacked up their prices to the limit permitted.
Greg Jackson, boss of Octopus Energy, revealed it had deliberately chosen not to raise prices by the full amount allowed. “Our company has set the price cap at £120million below it,” he told the Mirror on the fringes of an investment summit on Monday. “In a market that is working well for customers, companies should be absolutely working to keep prices down,” he said, adding “I’d love to see more competition.”
Consumer consumer Martin Lewis recently urged all households on standard tariffs – those impacted by Ofgem’s price cap – to switch to cheaper fixed rate deals.
It comes amid fears for millions of pensioners after the government scrapped winter fuel payments for most. Mr Jackson said: “If we have a cold winter, I hope they are able to step in and help people. The government is talking to energy companies about different ways of helping. I don’t know what their plans are.”
Octopus Energy has launched a scheme where struggling pensioners who miss out on winter fuel payments can apply for financial help of between £100 and £300, depending on their circumstances. The pot is worth £30million
Mr Jackson also called for households living near electricity pylons to be given cheaper power to compensate. “When we have new infrastructure, it is important that it brings down bills for local people,” he said. If your community hosts electricity infrastructure, you should get cheaper electricity bills.”
He praised Labour’s effort to bring about reform of the energy market since being elected, including a drive to boost green power.
Mr Jackson explained: “It was extremely helpful that the government came out of the starting gate with its announcements on planning reforms because for too long you couldn’t invest in building the green infrastructure we need in the UK that will bring bills down and will also improve our national security. We don’t want another gas crisis.
“They have also been making very positive sounds about grid reform, so not only can we build stuff, we can connect it. The bit we need now is market reform. Every wind turbine we built should bring people’s bills down.”
He said that with a form of regionalised pricing every area would see bills fall. “It’s because it reduces waste,” Mr Jackson explained. “In some regions the wind farms are turned off 40% of the time instead of giving people cheap electricity. If we gave those people cheap electricity at those times, not only would they benefit but everyone else wouldn’t have to pay those wind farms to turn off.” He said as a nation last year we spent £1billion paying companies to turn off turbines when it was windy.
