Re: Some people...
I've scanned through the dashboard1 showing the last couple of years and indeed recently the average kWh price is in the 10-25p range providing a reasonable saving outside of the peak 4-8pm (26-36p) band.
However, agile pricing removes the OFGEM price cap and replaces it with this I lifted directly from Octopus website2. (there’s a lot more being explained than just this bit, quite refreshing from a supplier)
>>>
min(2.20 x W + P, 95)
In this equation,
2.20 is a coefficient that includes our distribution costs, which varies based on where you are in Britain;
W is the wholesale cost of electricity for that period in pence per kilowatt-hour (p/kWh);
P is the peak-time premium, which ranges from 11 - 14 based on where you are, and is only applied between 4pm and 7pm.
95 is chosen to ensure the price is capped at 100p/kWh once VAT is added.
In this example…
The Agile price is 2.2 times the wholesale price of energy and between 4.00pm and 7.00pm an additional 12p / kWh is included (but capped at 100p / kWh, come what may).
There’re a few common questions this often prompts:
Why is there a penalty at the peak period? Why is there a 100p cap? How well does Agile reflect renewable supply?
To understand that, we need to look at what makes up our costs.
These are surprisingly complex and made up of a range of variables...
Wholesale – the wholesale price of energy can vary heaps, ranging from low negative numbers (when generation is really high, and demand is low) to over 200 p/kWh. Before the energy crisis, it was around 5 p/kWh overnight and 9 p/kWh at peak, in the current market conditions, it is around 22 p/kWh overnight and 36 p/kWh at peak.
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These rates follow seasonal trends, any summer savings will be likely be wiped out over a cold winter. I wouldn't recommend this to anyone who hasn’t got the capacity to cover their needs at potentially eye watering rates 24/7.
On the other hand Octopus does have a reasonable capped tariff, I’m happy enough using it :).
1 https://agileprices.co.uk/ - For a real bum-twitcher look at April 2nd 2022 on the Agile 22-08-21 tariff when the capped unit cost was 20p
2 https://octopus.energy/blog/agile-pricing-explained/