Octopus Tracker

Doc_N

Qyburn said:

Doc_N said:

Qyburn said:

Doc_N said:

It really shouldn’t be necessary to have to resort to social media to get a response from any company though.

You think the supplier should be obliged to put you onto a loss making tariff RIGHT AWAY?

What on earth makes you think it's a loss making tariff? It's calculated on a cost+ basis and pretty much guaranteed to be profitable. 

Octopus have said so, and it's quoted earlier in one of these threads. Looking  logically, each kWh that a tracker customer paid 18p for, could have been sold for 31p plus a government subsidy of 17p or whatever the actual figures are.

Forgoing a potential profit is not the same as making a loss.

masonic

Doc_N said:

masonic said:

This is the part that I simply cannot fathom. Suppose that it is loss-making as Octopus has claimed. It has been consistently lower than the average Agile rate, so not implausible that this is the case, and there have been good explanations earlier in the thread about the true cost to Octopus. A number of fixed costs are added to the wholesale rate to arrive at the unit rate and these may require adjustment.

It is within their power to adjust the formula to address this. It is completely normal for a supplier to adjust a tariff to reflect changes to underlying costs. So to a large extent this is a problem of their own making. If they didn't want to adjust the tariff, they could move it to their historic tariffs list and phase it out. Evidently it is not doing them any good running a waitlist and offering the tariff to 50 people a day. It simply isn't worth the aggravation of all of these disgruntled customers, some of which seem to be on a campaign of hostility due to their wait.

Firstly, I just don't accept any claim that it's a loss maker.  But secondly, they now appear to be using it as a means of luring new customers into their standard tariffs on a half-promise that they might at some point be moved to the Tracker - or indeed might not.  Such practices have very questionable legality.

If it is a fact that it is a loss maker, then your failure to accept it doesn't make it any less true. There isn't sufficient information for someone outside of the business to make such a judgement.

I'm not aware of any law preventing an energy supplier from putting a customer on a tariff and allowing them to register interest for a gated tariff which may or may not be offered to them subject to future availability. If you know of any such legislation, would you mind sharing?

masonic

Qyburn said:

Doc_N said:

Qyburn said:

Doc_N said:

It really shouldn’t be necessary to have to resort to social media to get a response from any company though.

You think the supplier should be obliged to put you onto a loss making tariff RIGHT AWAY?

What on earth makes you think it's a loss making tariff? It's calculated on a cost+ basis and pretty much guaranteed to be profitable. 

Octopus have said so, and it's quoted earlier in one of these threads. Looking  logically, each kWh that a tracker customer paid 18p for, could have been sold for 31p plus a government subsidy of 17p or whatever the actual figures are.

This opportunity cost is not why it has been claimed that it is loss making. The tariff has been made variable term to address some of the shortcomings of its interaction with price caps.

marlot

Doc_N said:

Qyburn said:

Doc_N said:

It really shouldn’t be necessary to have to resort to social media to get a response from any company though.

You think the supplier should be obliged to put you onto a loss making tariff RIGHT AWAY?

What on earth makes you think it's a loss making tariff? It's calculated on a cost+ basis and pretty much guaranteed to be profitable. 

It's only guaranteed to be profitable if people are compelled to stay on it when rates go high.  ie. that tracker customers accept the good AND and the bad.

For standard rated supply, Octopus (and the others) buy electricity and gas at forward prices.  At the moment, those are much higher than today's spot rate.  These forward rates obviously include some risk margins, etc.

The risk with tracker (for Octopus) is that people want to use it when the spot rate is lower than the forward rate, but want to abandon it when the spot rate rises.  As people abandon tracker in favour of the security of the forward rate, Octopus could well find they've under-bought forward supply - and so make a thumping loss.

MultiFuelBurner

So here is my take on the tentacled one.

I have read in the past that their home grown Kraken software reduced their operating costs by 50%.

If we take that to be true(I will find a link later) operating costs as applied by Ofgem as part of the price cap provided £258 per customer on the notional average.

I believe Octopus have approx 5million customers with the take over of bulb and when they are all on Kraken the operating cost reduction alone could equate to (£129 per customer) £645million. That doesn't include the profit per customer.

I don't know the percentage of Octopus customers on the "Beta" tariffs but I believe up until the HotUKDeals exposure it was very low. I can see why they might trickle people in with a waiting list as some will opt for other tariffs in the mean time, their TOU offerings.

Octopus appear to be a very loyal supplier, rewarding those that have been early adopters contract renewals on Beta tariffs which are truly amazing. 

They seem to put back rather than take everything.

Doc_N

masonic said:

Doc_N said:

masonic said:

This is the part that I simply cannot fathom. Suppose that it is loss-making as Octopus has claimed. It has been consistently lower than the average Agile rate, so not implausible that this is the case, and there have been good explanations earlier in the thread about the true cost to Octopus. A number of fixed costs are added to the wholesale rate to arrive at the unit rate and these may require adjustment.

It is within their power to adjust the formula to address this. It is completely normal for a supplier to adjust a tariff to reflect changes to underlying costs. So to a large extent this is a problem of their own making. If they didn't want to adjust the tariff, they could move it to their historic tariffs list and phase it out. Evidently it is not doing them any good running a waitlist and offering the tariff to 50 people a day. It simply isn't worth the aggravation of all of these disgruntled customers, some of which seem to be on a campaign of hostility due to their wait.

Firstly, I just don't accept any claim that it's a loss maker.  But secondly, they now appear to be using it as a means of luring new customers into their standard tariffs on a half-promise that they might at some point be moved to the Tracker - or indeed might not.  Such practices have very questionable legality.

If it is a fact that it is a loss maker, then your failure to accept it doesn't make it any less true. There isn't sufficient information for someone outside of the business to make such a judgement.

I'm not aware of any law preventing an energy supplier from putting a customer on a tariff and allowing them to register interest for a gated tariff which may or may not be offered to them subject to future availability. If you know of any such legislation, would you mind sharing?

https://www.legislation.gov.uk/uksi/2008/1277/schedule/1/made

Paras 5 & 6 - subject of course to the particular facts of each case.

silverwhistle

marlot said:

The risk with tracker (for Octopus) is that people want to use it when the spot rate is lower than the forward rate, but want to abandon it when the spot rate rises.  As people abandon tracker in favour of the security of the forward rate, Octopus could well find they've under-bought forward supply - and so make a thumping loss.

It may be relevant that Octopus took on Bulb customers as a lump under duress as the supplier of last resort: it wasn't them having a plan and gradually taking customers due to their more competitive offer. As marlot says, they have hedged, successfully for their existing customer base possibly, but not for the more recent accessions. Remember that forward prices in the market reflect a degree of risk, which in the last year have been difficult to quantify.

If someone wants to play the market and take advantage of the spot rate there is always Agile.  

Qyburn

Doc_N said:

What on earth makes you think it's a loss making tariff? It's calculated on a cost+ basis and pretty much guaranteed to be profitable. 

Why do you think Octopus would lie about it?

The way I see it, as an outsider, the Ofgem price cap of 51p (or whatever) is supposed to allow the Supplier to make a couple of percent profit using hedged energy supplies, ie bought in advance.  Tracker is calculating off today's price.  But Octopus was required by Ofgem to hedge, so they can't back out of those long term contract prices and buy off the spot market instead, except maybe in a planned and medium term process. Someone with inside knowledge will doubtless clarify or correct.

But the fact is that Octopus has stated it's loss making and I can't see why they would lie about that.

70sbudgie

I have just signed up to the gas tracker waitlist. I have been with Octopus for a few years and have just switched to Flux for electricity. I was super impressed with the speed of the switch to Flux and think that much of it must have been automated (as it happened over Easter weekend). 

My guess is that the 50 sign ups per day is a way to manage workload and customer expectations. I imagine that the Octopus staff are pretty busy sorting out all the new Bulb customers. Octopus have just jumped from being an industry disruptor (their words) to being very firmly in the "big 6". They will be going through huge internal changes to adapt to their new size.

Also a 6 month wait will give all the potential customers that are new to smart / beta tariffs a chance to better understand what they are signing up for. They may be clamouring for the cheap energy now, but they'll make even more fuss when the rates get near the caps.

Doc_N

Qyburn said:

Doc_N said:

What on earth makes you think it's a loss making tariff? It's calculated on a cost+ basis and pretty much guaranteed to be profitable. 

Why do you think Octopus would lie about it?

The way I see it, as an outsider, the Ofgem price cap of 51p (or whatever) is supposed to allow the Supplier to make a couple of percent profit using hedged energy supplies, ie bought in advance.  Tracker is calculating off today's price.  But Octopus was required by Ofgem to hedge, so they can't back out of those long term contract prices and buy off the spot market instead, except maybe in a planned and medium term process. Someone with inside knowledge will doubtless clarify or correct.

But the fact is that Octopus has stated it's loss making and I can't see why they would lie about that.

I love your faith in the honesty of large corporations.