The energy regulator chose Octopus after a “competitive process” to get the best deal for Avro’s clients.
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At a glance: 5 key points
- Octopus Energy specialises in sustainable household gas and electric.
- Ofgem has said that all outstanding credit balances owed to existing and former Avro customers will be paid, and householders transferred to Octopus will be protected by the energy price cap.
- Energy supplies to Avro customers will continue as normal following the switch to Octopus and those affected by the change will be contacted in the coming days.
- Ofgem has advised those who want to shop around for a better quote to wait until the transfer to Octopus has been completed before switching suppliers.
- Any customers who choose to switch to a different supplier will not be charged an exit fee.
What’s been said
Gillian Cooper, head of energy policy for Citizens Advice, said: “Having a new supplier should remove some uncertainty for Avro Energy’s 580,000 customers.
“Their credit balances will be carried over and their new supplier, Octopus Energy, will let them know what their new tariff will be.
“Anyone struggling to pay their bills must be supported and Octopus Energy must make sure that any debt repayment plans Avro Energy customers may have been on before are continued.
Ms Cooper stressed that some pensioners and those on low incomes who were eligible for the government’s warm home discount under their Avro tariff must continue to receive it with their new supplier.
She added: “It’s up to the government and Ofgem to work with suppliers to ensure this happens.”
Why are wholesale gas prices soaring?
The price hike comes after the cost of gas on wholesale markets rocketed at unprecedented rates.
The price of wholesale gas has surged by 70% since August and 250% since the beginning of the year, according to trade body Oil & Gas UK.
Many factors have been attributed to the rising energy prices, including the demand for gas increasing as the economy opens back up from the pandemic, the closure of several gas platforms in the North Sea to perform maintenance that was paused due to the Covid-19 outbreak, and supply from Russia drying up.
Cables that import electricity from France were also damaged last week and as September has not been a very windy month, it has meant more gas is needed to produce electricity.
The soaring prices has already caused several suppliers to go bust, including Green Avro, Utility Point and People’s Energy, because the unprecedented rises have meant customers are now paying suppliers less for energy that it is costing them to buy.
Bills are set to increase to £1,277 for a typical user from 1 October and are expected to go up again in April to a record high of £1,455, meaning around 15 million UK households face a £178 annual hike to their energy bills.
Regulator Ofgem has warned consumers that the October rise will cost an average price increase of £135 this winter.
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