Why we are making changes to our So Flex tariff
You may have seen that we are making changes to our So Flex tariff. In this blog, we’ll set out what is changing, why, and the options for customers on So Flex.
Why are you making changes to So Flex?
In Great Britain, energy suppliers certify their tariffs as 100% green or renewable by procuring Renewable Energy Guarantee of Origin (REGO) certificates. Since its foundation, So Energy has been one of the few suppliers in the market that has procured enough REGOs to cover all of the energy used by our customers.
So Flex, our variable tariff, is subject to Ofgem’s price cap. Ofgem’s price cap has always assumed that the tariffs it covered weren’t 100% green. The cost of purchasing REGOs was never included in the price cap.
Historically, this wasn’t a problem. By being more efficient and by providing better service, we were able to offer fixed tariffs below the price cap and, by extension, this meant we had ‘wiggle-room’ to absorb the cost of REGOs for customers on So Flex. However, this is no longer the case as you can see from this graph:
Before the energy crisis, we were able to offer a fixed tariff for £71 less than the price cap. Today, our fixed tariff costs £23 more than the 1 October price cap. And it’s not just us – go on any price comparison website and you will see that all suppliers are struggling to offer a fixed tariff set below the cap. In essence, we have run out of ‘wiggle-room’ to absorb the REGO cost.
The chief cause of this is that the cap is failing to keep up with real-world changes. For example, Ofgem is currently reviewing how energy suppliers’ operational costs have changed between 2017 and 2022 but doesn’t anticipate updating the price cap to account for this until Winter 2024/2025. A lot has happened in energy since 2017, so the impact of this lag is very significant.
What is changing?
We have had to take a decision to no longer procure REGOs for our So Flex customers from October 2023 onwards. This will mean that So Flex will no longer be certified as 100% green.
What are my options?
We have always been committed to giving customers choice, offering competitive tariffs but also tariffs and products that enable customers to reduce their environmental impact.
So Flex will continue to be our price-capped variable tariff but other options are available. Our fixed tariffs will remain 100% green, backed by REGOs. At the time of writing this blog, So Juniper, a 12-month fixed tariff, is available.
We are also launching a 100% green tracker tariff, So Flex - Green. This tariff tracks the level of Ofgem’s price cap, with an additional 1.5p/kWh (including VAT) added electricity unit rates to cover the cost of purchasing REGOs based on today’s cost forecasts. In essence, So Flex - Green offers the flexibility of So Flex while providing you the guarantee of 100% green energy of So Juniper. Like So Flex, the tariff will update quarterly, in line with the price cap and there are no exit fees. The tariff has a fixed duration of 12 months – this is to allow us to reset the cost of procuring REGOs, which rise and fall over time. Both tariff options are available to So Energy customers through your online account.
We also offer a range of other green solutions for customers, including our industry-first home solar and battery storage product, and have other exciting services in the pipeline so watch this space.
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