Renewable energy supplier Octopus Energy has announced it is reducing the cost of its standard variable tariff (SVT) from 1 May as a result of falling wholesale costs.

The challenger supplier says the cost of its Flexible Octopus tariff will decrease by about 3 per cent.

Octopus Energy’s chief executive, Greg Jackson, told Utility Week: “We’re doing this because falling wholesale costs enable us to pass on lower prices to customers.

“We think that restoring trust in energy really requires this sort of action as soon as possible because so many customers perceive pricing as unfair.”

On Monday (1 April) Ofgem’s revised price cap came into effect with an increase of £117, taking the total cap to £1,254.

The energy regulator said rising wholesale costs were mostly to blame for the increase, yet since the cap was calculated wholesale costs have decreased and experts are predicting the cap to fall later in the year.

Two other challenger brands have also announced they are lowering their prices.

London-based renewable energy supplier Bulb said in March it was cutting prices by an average of £20 a year, following a fall in wholesale gas costs.

In a statement, the challenger supplier said the price drop means its single tariff is now £250 cheaper than standard plans offered by its big six rivals and that its prices are now 12 per cent lower than they were in December 2018.

Similarly Igloo Energy said it too planned to cut prices, this time by an average of 2.6 per cent.

A typical customer on Igloo Energy’s single tariff “Igloo Pioneer” can expect to see a £36 decrease on their gas and electricity bills per year.

Octopus Energy recently launched a new tariff to replace the export element of the feed-in tariff (FIT) which closed to new applicants at the end of March.

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