Octopus Energy cuts bills and offers payment holidays for customers in new £40million support package

A new support package will reduce customers’ bills by 4% compared with Ofgem

Octopus Energy has announced a new £40million support package to help customers amid the cost of living crisis.

The package includes standing charge reductions to all households on its ‘Flexible Octopus’ tariff. It means that all customers on this tariff will automatically receive a 4% discount in standing charges compared to the Ofgem price cap.

A standing charge is the daily amount that you must pay for energy - despite the amount you use - to be connected to the grid.

Additionally, up to 100,000 customers in greatest need will be able to apply for “standing charge holidays” of up to six months.

Octopus Energy has announced a new £40million support package to help customers with rising energy bills (Photo: Getty Images)

The energy firm said that the standing charge holidays will allow customers to benefit more from energy savings, and they will no longer be penalised just for having a meter.

Greg Jackson, CEO and founder of Octopus Energy explained: “High standing charges are egregious. This £40m package is the beginning of our battle to bring them down.

“Far too many costs have been loaded onto standing charges - from grid and distribution charges to failed suppliers.

“These charges just make it more difficult for hard-pressed customers to save money through efficiency and Octopus is making a stand to change that.”

Details on how to apply for the support are yet to be confirmed, but households on a low income will be eligible. It means that customers could go for several months without needing to pay a standing charge, depending on their circumstances.

Government support from October

The standing charge support from Octopus comes on top of a new Energy Price Guarantee announced by Prime Minister Liz Truss.

The energy plan will see a price freeze that will cap energy bills at £2,500 for the next two years, from 1 October. It means that a planned October price cap rise which was tipped to see average annual energy bills hit £3,549 has been avoided.

It is expected that the policy will save a typical household at least £1,000 a year, while the average flat will save £700, based on current prices from October.

The Energy Price Guarantee limits the amount households can be charged per unit of gas or electricity, meaning the exact amount of your bill will continue to be influenced by how much energy you use.

The government’s previously announced £400 energy bills discount for all households this winter will still go ahead and will be paid in six instalments from October. The most vulnerable UK households will also continue to receive £1,200 of support provided in instalments over the year. An additional discretionary fund will be available for those households who are outside of these schemes, such as those not on standard gas / electricity contracts.