Home Energy Rates

IOWJJBTM2025

boatman said:

My unit rate has gone up from about 19.5p up to 20.86p now.. standing charge up from 51p to 54p.. works out about a 6.66% increase.. not exactly 0.2% they claim for most price cap rises..

Very interesting - I assume that you only use Electric and live in a different region.
My rates are for dual fuel in the Southern region.
I calculated my increase on 1st Jan 2026 using the typical usage and got 0.714%.
There was supposed to be an increase of 2% on October 1st 2025 which was not applied.

QrizB

IOWJJBTM2025 said:

There was supposed to be an increase of 2% on October 1st 2025 which was not applied.

Did Home Energy write to you personally and tell you there would be a 2% increase in October?

Because if they didn't, you're perpetuating the misunderstanding that was explained to you back on the first page of this thread.

IOWJJBTM2025 said:

As stated in my original post MSE says the Cap prediction went up on 1st October by 2% - My rate did not increase.

The Ofgem cap did change on the 1st of October. At the time of your post in November, this was not a prediction; it was a fact, as Ofgem announced the change on the 27th of August.

https://www.ofgem.gov.uk/news/changes-energy-price-cap-between-1-october-and-31-december-2025

However, the cap is exactly that; a maximum rate for a variable tariff. It's not a mandatory tariff, and suppliers are free to offer lower rates if their own financing allows it.

Your Home Energy variable tariff is cheaper than the cap. Home Energy can change it by any amount at any time, so long as it doesn't exceed the cap.

You never had any reason to expect a 2% increase in October 2025.

IOWJJBTM2025

QrizB said:

IOWJJBTM2025 said:

There was supposed to be an increase of 2% on October 1st 2025 which was not applied.

Did Home Energy write to you personally and tell you there would be a 2% increase in October?

Because if they didn't, you're perpetuating the misunderstanding that was explained to you back on the first page of this thread.

IOWJJBTM2025 said:

As stated in my original post MSE says the Cap prediction went up on 1st October by 2% - My rate did not increase.

The Ofgem cap did change on the 1st of October. At the time of your post in November, this was not a prediction; it was a fact, as Ofgem announced the change on the 27th of August.

https://www.ofgem.gov.uk/news/changes-energy-price-cap-between-1-october-and-31-december-2025

However, the cap is exactly that; a maximum rate for a variable tariff. It's not a mandatory tariff, and suppliers are free to offer lower rates if their own financing allows it.

Your Home Energy variable tariff is cheaper than the cap. Home Energy can change it by any amount at any time, so long as it doesn't exceed the cap.

You never had any reason to expect a 2% increase in October 2025.

My expectation is that every 3 months when Ofgem reviews the costs Home Energy will review and advise impact. I also realise that I have a variable tariff and if Home Energy choose they can make changes at any time.
As you say in October '25 the Price Cap went up by 2%. I personally was expecting my rates to be adjusted. They did not make any changes to my rate between 12th September'25 and 31st December'25

On 4th December Home Energy wrote to me to advise my rates would be changing from 1st January 2026.
If you read the text below from their letter it directly details that the cap includes national changes that all suppliers must pass on. This indicates that the price cap does link to the Home Energy rate.

Home Energy is consistently the cheapest energy supplier on the market despite increases to the Ofgem Price Cap in January 2026

You may have seen the headlines: Ofgem is increasing the energy price cap to £1,758 for a typical household from 1 January 2026, including a 3% rise in gas standing charges.

Ofgem's new cap: £1,758 per year

From 1 January 2026: Home Energy tariff: £1,510 per year (For customers paying Direct Debit Only) That's a saving on average of £248 a year simply by staying with us

To help with winter fuel costs: Home Energy has made the decision to pass on any reductions to the wholesale cost of energy to you. While standing charges must rise to the new national level, we have chosen to reduce your electricity and gas unit rates (on average) wherever possible.

This gives you better value precisely when winter usage is highest, helping offset part of the unavoidable standing-charge increase.

Standing charges will rise from January: This isn't a decision made by Home Energy. Ofgem's new cap includes national charges all suppliers must pass on, such as:

·         Upgrades to the energy networks

·         Government policy costs

·         Support for renewable investment and net-zero

This affects every household in the UK.

What matters is that even after this change, your revised tariff remains cheaper than any other tariff in the UK market - Fixed or Variable - at the time of writing Good to know: Your choice to pay by Direct Debit means you may save about 7% compared with paying on receipt of bill (on average). We’re proud to offer the UK’s cheapest energy tariff, so there is no need to fix! (And there are no exit fees too!)

Scot_39

I am not sure you are interpreting the must pass on correctly - as those three are only components of the standing charges and not the total. 

As Home Energy own costs and operating margins are also part covered - and they are (or were if no longer) not the only supplier who have been discounting standing charges to their customers on SVT / E7 variable etc.

They might have to pay for those components per customer - they may even at a push as letter really have to charge their customers 100% for them - but they definitely do not have to charge the whole amount - its a cap - a maximum - even although many simply choose to.

Ofgem send suppliers a nil kWh table (effectively the standing charge) - and a total table (units and nil kWh combined) - per fuel - gas, single rate electric and multirate electric (think likes of E7) for the three main payment methods they insist on - annualised DD, standard credit and prepayment.

But the cap includes - internal and external costs / allowances - on both unit rates and standing charges. 

Compare Ofgem Jan regional levels say with Octopus Jan levels and they are still off be a few % lower.

https://www.ofgem.gov.uk/information-consumers/energy-advice-households/get-energy-price-cap-standing-charges-and-unit-rates-region

https://octopus.energy/blog/energy-price-cap-jan-2026/

You will see they are still discounting by upto 3p/day in the most expensive region(s) for electric.

Its a bit old now - but the clue is probably in the mix of what SC are made up of - a nice brief summary - from the Aug 2024 public consultation on zero SC tariffs - when Ofgem gave a breakdown of the then standing charges and what they paid for.

See P9 here

https://consult.ofgem.gov.uk/energy-supply/standing-charges-domestic-retail-options/supporting_documents/standing_charges_domestic_retail_options.pdf

Of the at the time £220 electric and £115 gas annual charges - £62 and £84 were operating costs - that includes the suppliers own costs - and £26+20 other costs - so still £10s if not the full amount - not mentioned in the Home Energy letter as must pass ons - available as potential discounts - if can still remain profitable and pass new financial resilience tests (Note Octopus were one of 3 who did not pass 100% cleanly last year).

Ildhund

Scot_39 said:

They might have to pay for those components per customer 

Of the 'policy' costs, only the Warm Home Discount is currently levied on suppliers per customer. All the others are levied per MWh, even though Ofgem choose to include some of them in the standing charge. It must be a nightmare for suppliers to account for. I can't be bothered to find the reference at this time of night, but I'm fairly sure there are negotiations going on about moving WHD to a per-MWh levy like everything else.

Happy New Year everybody!