Octopus Energy announces new exit fees due to ‘volatile market’

Octopus Energy has reintroduced exit fees on its new fixed-rate energy tariffs following a surge in wholesale energy prices. The move comes as global energy markets react to the ongoing conflict involving the US, Israel, Iran and the wider Middle East, causing significant volatility in gas and oil prices. Octopus Energy had long stood out in the UK energy market by offering fixed-rate tariffs without exit fees, allowing customers total flexibility to switch if prices drop.

On its website, Octopus Energy states: "Historically, we usually haven't put exit fees on our tariffs, preferring to absorb these costs ourselves to give you total flexibility. But occasionally, when prices get really volatile, we’ve had to introduce them so we can continue to offer you the lowest possible fixed rates".

The only previous time Octopus implemented exit fees was during the 2022 energy crisis triggered by the Russian invasion of Ukraine.

Why do some fixed tariffs have exit fees?

When a customer signs up for a fixed-rate tariff, the energy supplier essentially buys the energy for that entire term in advance in order to guarantee that price. If a customer leaves the tariff early and wholesale market prices have dropped in the meantime, the supplier is left with energy it has already paid a high price for. Selling that energy back to the grid at a lower current market rate results in a financial loss. Exit fees are used by suppliers to recoup some of this cost and avoid having to price the risk of departing customers into their upfront tariff rates. However, consumers are not reimbursed if a supplier profits from energy it can sell back to the grid at a higher price.

Who is affected by the change?

If you are an Octopus Energy customer, your current situation depends on the specific tariff you are on:

• Existing fixed tariffs - If you are already signed up to a fixed tariff that did not have exit fees when you joined, your terms have not changed. You will not face any exit fees if you decide to leave early.
• Variable tariffs - Customers on the standard variable tariff, known as Flexible Octopus, remain on a "no-strings" plan. This tariff continues to have zero exit fees.
• New fixed tariffs - If you sign up for a new fixed-rate tariff with Octopus Energy from March 2026 onwards, exit fees will apply. The exact fee will be clearly stated before you complete your switch.

Should you fix your energy tariff now?

The escalation of the conflict in the Middle East has raised concerns about the long-term impact on global supply routes, particularly for liquefied natural gas. While the UK imports energy from multiple regions, major disruptions can push wholesale electricity and gas prices higher. We cover this in more detail in our article "Energy suppliers pull fixed-rate tariffs - Is now the time to fix?"

If you are considering whether to fix your energy bills, here are some steps you can take:

• Check your current rate - Find out exactly what you are paying per unit (kWh) and for your daily standing charge. Compare this against the current Energy Price Cap and any available fixed-price energy deals.
• Weigh up price certainty vs flexibility - Fixing your tariff provides peace of mind that your rates will not increase for the duration of the contract, which is beneficial if wholesale prices continue to rise. However, the reintroduction of exit fees means you will be penalised if you want to switch later should prices unexpectedly fall.
• Read the terms carefully - Before agreeing to any new fixed deal, whether with Octopus or another supplier, always check the early exit fee amount. These can vary significantly between providers and are typically charged 'per fuel' (i.e., separate fees for gas and electricity).