Octopus Tracker

bristolleedsfan

silverwhistle said:

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. 

https://www.bloomberg.com/news/articles/2022-07-20/octopus-is-only-bidder-left-for-failed-uk-energy-supplier-bulb   20 July 2022

Octopus Is Only Bidder Left for Failed UK Energy Supplier Bulb

[Deleted User]

Doc_N said:

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.

That is a totally different argument. Octopus has always said that a number of its beta tariffs lose them money as they are designed to be energy market disruptors aimed at encouraging take up of such things as smart meters; EVs and heat pumps etc.

I am presently on Octopus Flux that allows me to import electricity at 20p/kWh when supply exceeds demand, and return it to the Grid at 38p/kWh when demand is high. 

If Octopus is making profits out of these products, we should ask ourselves ‘why are other suppliers not rushing to follow in Octopus’ wake’? My money is on the CEO telling us how it is.

Doc_N

[Deleted User] said:

Doc_N said:

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.

That is a totally different argument. Octopus has always said that a number of its beta tariffs lose them money as they are designed to be energy market disruptors aimed at encouraging take up of such things as smart meters; EVs and heat pumps etc.

I am presently on Octopus Flux that allows me to import electricity at 20p/kWh when supply exceeds demand, and return it to the Grid at 38p/kWh when demand is high. 

If Octopus is making profits out of these products, we should ask ourselves ‘why are other suppliers not rushing to follow in Octopus’ wake’? My money is on the CEO telling us how it is.

Fair enough.  But mine's on his doing his job, which is to maximise profits for shareholders.  I'm sure he wouldn't tell outright lies, but accountancy can easily convert a profit to a loss. 

Qyburn

That's approaching a conspiracy theory.  Ofgem calculates the price at which a Supplier, correctly hedging, can barely make a profit.  Octopus sells for less than half that price but still makes a profit, and want to keep this fact secret.

Evidence suggesting loss-making - Octopus's statement, comparison with Ofgem calculations and the fact they're limiting uptake

Evidence contradicting - anything said by a big company must by definition be untrue

gt94sss2

Doc_N said:

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.

I suspect Octopus are making a loss on the tariff - not necessarily because of the price they are charging - but due to the fact that they were attracting lots of customers from other suppliers who wanted to go on it.

While you would think this wouldn't usually be a issue, Ofgem have introduced a Market Stabilisation Charge.

The MSC temporarily requires all domestic suppliers acquiring a domestic customer to pay a charge to the losing supplier, when wholesale prices fall considerably below the relevant wholesale price cap index.

Given recent wholesale prices, this will be costing Octopus money for anyone joining them.

https://www.ofgem.gov.uk/publications/market-stabilisation-charge-dashboard

SJMALBA

Qyburn said:

That's approaching a conspiracy theory.  Ofgem calculates the price at which a Supplier, correctly hedging, can barely make a profit.  Octopus sells for less than half that price but still makes a profit, and want to keep this fact secret.

Evidence suggesting loss-making - Octopus's statement, comparison with Ofgem calculations and the fact they're limiting uptake

Evidence contradicting - anything said by a big company must by definition be untrue

Tracker is not hedged, it's based upon day ahead wholesale prices to which Octopus applies its own formula to arrive at the retail unit rate charged to customers (which covers their costs and, presumably, some profit?).

The complication is the UR caps that Octopus have chosen to apply to the tariff - if URs go above this, Octopus pay the difference - they can increase, or remove the caps for existing customers, but so far have chosen to bring out a new version of Tracker with increased caps. The question then is how many people are on the earlier versions which have lower caps? Presumably not many in the grand scheme of things (IIRC, it was claimed earlier in this thread that there are only 16 people on v2, for example (though it was only available for a short period of time)).

The original Tracker v1, which has the lowest UR caps, certainly was sitting at those caps for a significant amount of time over winter 21/22 etc., so will have cost Octopus, but again, how many people were on that version?

Customer numbers seem to have increased (significantly?) since the tariff has come to the attention of the wider public, but the most recent version of Tracker, introduced in November, has very high caps; in addition, URs have been  'low' (relatively speaking) for most of the autumn, winter and spring so far, and much of the time (often well) below EPG.

Given all of the above, it seems unlikely, IMO, that, overall and all things considered, Octopus is making a significant loss due to Tracker?

Then again, I don't work in the industry, let alone for Octopus, and the above is just my layman's understanding of how it works, so... ?

bristolleedsfan

SJMALBA said:

Qyburn said:

That's approaching a conspiracy theory.  Ofgem calculates the price at which a Supplier, correctly hedging, can barely make a profit.  Octopus sells for less than half that price but still makes a profit, and want to keep this fact secret.

Evidence suggesting loss-making - Octopus's statement, comparison with Ofgem calculations and the fact they're limiting uptake

Evidence contradicting - anything said by a big company must by definition be untrue

Tracker is not hedged, it's based upon day ahead wholesale prices to which Octopus applies its own formula to arrive at the retail unit rate charged to customers (which covers their costs and, presumably, some profit?).

The complication is the UR caps that Octopus have chosen to apply to the tariff - if URs go above this, Octopus pay the difference - they can increase, or remove the caps for existing customers, but so far have chosen to bring out a new version of Tracker with increased caps. The question then is how many people are on the earlier versions which have lower caps? Presumably not many in the grand scheme of things (IIRC, it was claimed earlier in this thread that there are only 16 people on v2, for example (though it was only available for a short period of time)).

The original Tracker v1, which has the lowest UR caps, certainly was sitting at those caps for a significant amount of time over winter 21/22 etc., so will have cost Octopus, but again, how many people were on that version?

Customer numbers seem to have increased (significantly?) since the tariff has come to the attention of the wider public, but the most recent version of Tracker, introduced in November, has very high caps; in addition, URs have been  'low' (relatively speaking) for most of the autumn, winter and spring so far, and much of the time (often well) below EPG.

Given all of the above, it seems unlikely, IMO, that, overall and all things considered, Octopus is making a significant loss due to Tracker?

Then again, I don't work in the industry, let alone for Octopus, and the above is just my layman's understanding of how it works, so... ?

Screenshot posted either on this thread of another tracker thread of a DM reply from Octo chief along the lines that Ofgem have required energy companies to hedge virtually all customers energy.

SJMALBA

bristolleedsfan said:

SJMALBA said:

Qyburn said:

That's approaching a conspiracy theory.  Ofgem calculates the price at which a Supplier, correctly hedging, can barely make a profit.  Octopus sells for less than half that price but still makes a profit, and want to keep this fact secret.

Evidence suggesting loss-making - Octopus's statement, comparison with Ofgem calculations and the fact they're limiting uptake

Evidence contradicting - anything said by a big company must by definition be untrue

Tracker is not hedged, it's based upon day ahead wholesale prices to which Octopus applies its own formula to arrive at the retail unit rate charged to customers (which covers their costs and, presumably, some profit?).

The complication is the UR caps that Octopus have chosen to apply to the tariff - if URs go above this, Octopus pay the difference - they can increase, or remove the caps for existing customers, but so far have chosen to bring out a new version of Tracker with increased caps. The question then is how many people are on the earlier versions which have lower caps? Presumably not many in the grand scheme of things (IIRC, it was claimed earlier in this thread that there are only 16 people on v2, for example (though it was only available for a short period of time)).

The original Tracker v1, which has the lowest UR caps, certainly was sitting at those caps for a significant amount of time over winter 21/22 etc., so will have cost Octopus, but again, how many people were on that version?

Customer numbers seem to have increased (significantly?) since the tariff has come to the attention of the wider public, but the most recent version of Tracker, introduced in November, has very high caps; in addition, URs have been  'low' (relatively speaking) for most of the autumn, winter and spring so far, and much of the time (often well) below EPG.

Given all of the above, it seems unlikely, IMO, that, overall and all things considered, Octopus is making a significant loss due to Tracker?

Then again, I don't work in the industry, let alone for Octopus, and the above is just my layman's understanding of how it works, so... ?

Screenshot posted either on this thread of another tracker thread of a DM reply from Octo chief along the lines that Ofgem have required energy companies to hedge virtually all customers energy.

How do you hedge Tracker?

Also, from Tracker FAQ:

Chrysalis

JohnPo said:

I agree, historically (i.e. before the Putin inspired energy crisis) folk with EVs would use Octopus Agile until autumn and then switch to Octopus Go and  switch back again to GO after winter - bit of historical context on pricing related to wholesale costs.

Tracker suddenly became interesting around late spring time 2022 when the 12 month fixed caps were a good protection against possible higher energy costs going into late autumn / winter.  The Government EPG support made both tracker and agile even better over the last 6 months - come 1st July when the EPG support ends all bets are off and the standard SVT tariff or other variants like Econ 7 or specific EV tariffs might be a  batter option depending on where wholesale are heading at that time.

Tracker and Agile going into into next winter based on latest caps without the government EPG support is a big risk and I expect folk to turn up on here moaning about it as they did not fully understand what they signed up to.

The EPG only subsidises the cap level, not the tracker cost, unless the cost hits that subsidised cap.

During a lot of the winter the cap wasnt reached meaning there was no actual EPG effect for many agile/tracker customers.

But of course as always EPG or not, when one goes on a tracker type tariff, they have to be aware of the risks, and that the only assurance is the cap, anything goes below it.

Chrysalis

masonic 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.

It isn't necessary, but emails and transcripts of phonecalls aren't published, so when citing from the internet, it will be the social media responses that people will find. For non-time sensitive matters I usually email them, and would phone if it was something urgent (but the social media team is usually really fast, so might go that route if phoning was less convenient).

In the above case, the individual has probably already been told they have to wait via more conventional channels and is trying it on in the hope that the social media team will feel more pressured to acquiesce in a public forum. Good to see them standing firm.

If anything the social media team will be much less likely to give, as then they will have done it publicly, which would risk those on the waiting list becoming irate, whilst if someone jumps the queue via private conversation, others only know if they then boast about it on the internet afterwards.