Octopus Energy issues major new £75 update | Personal Finance | Finance

Octopus Energy will charge £75 if customers want to exit new contracts amid the war in the Middle East. Anyone signing up to the energy giant’s 12 month, fixed dual-fuel tariff will pay the amount per fuel to get out of the contract early.

The temporary move comes as analysts Cornwall Insight said forecasts for Ofgem‘s price cap for July to September had surged to £1,801 a year for a typical dual fuel household. This is an increase of £160 or 10% on April’s cap announced last week. The consultancy said the rise was a “cause for concern”, warning any increase would also feed through to electricity prices.

Wholesale energy markets have climbed amid heightened tensions in the Middle East after the US and Israel attacked Iran on Saturday (February 28).

Retaliatory attacks from Iran damaged oil and gas infrastructure across key Gulf states. QatarEnergy said it was forced to pause production of liquified natural gas (LNG) at several sites hit during Iran’s strikes.

The Islamic Republic also warned ships not to use the Strait of Hormuz, a vital shipping route for about 20% of global oil and gas, adding further pressure to global energy markets.

Britain and other European countries don’t rely on Qatari LNG, but reduced supply will push up prices as importers such as Japan, South Korea and Pakistan, seek alternative sources.

Octopus Energy said its £75 exit fee was introduced on Wednesday (March 4), the Telegraph reports.

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The energy giant said most other suppliers maintain exit fees even during “normal” circumstances.

An Octopus Energy spokeswoman said: “We are still offering fixed tariffs and will continue to do so for as long as we can, despite the extremely challenging situation in the Middle East.

“There is no shortage of energy supply. However, wholesale energy prices have risen considerably this week, and we can no longer absorb the full cost of the energy we buy in advance for new fixed tariff customers if they choose to leave us during the period of the fix.

“Because of this, we have had to introduce exit fees temporarily, but only for customers who choose to take out a new fixed tariff.”

She added: “Like during the pandemic and the last energy crisis, Octopus will continue to keep prices as low as possible for our customers, even if that means sacrificing profits.”

On experts’ warning household energy bills forecast to rise by 10% from July, the Government said: “The price cap is fixed until the end of June and energy bills for households will go down for its three-month duration thanks to government action.

“The only way to protect ourselves from these price spikes is to get off the rollercoaster of fossil fuel markets.”