Martin Lewis issues warning for 28million households to ‘act ASAP’ and save on energy bills as suppliers pull deals
MARTIN Lewis has issued a warning to millions of households who could slash their energy bills.
Last week, the energy price cap jumped from £1,568 to £1,717 a year.
This means that bills have risen by 10%, and the average household bill is up by more than £12 a month, or £149 a year.
However, Martin Lewis said: "Last week, the energy pants price cap, which dictates the rate eight in 10 homes in Eng, Scotland and Wales pay, rose by 10%
"Yet, for now, the deals you can compare and switch to are far cheaper.
"That's why last week I called the current cap a pants cap, as, stay on it, and you'll miss out on savings."
Read more in money
Around 28million households are on standard variable tariffs, which are affected by the price cap, according to Ofgem.
However, there are several fixed energy deals that beat these tariffs.
The founder of MoneySavingExpert.com said: "A fix gives you peace of mind that the rate won't change for a set time.
"Currently, a host of one-year fixes hugely undercut the price cap.
"Yet world turmoil has hit oil prices, and there's potential knock-on to energy prices, so we've already seen three of last week's cheapest fixes pulled and replaced with more expensive ones."
EDF Energy also pulled the cheapest fixed deal on the market on Monday.
Those who signed up for the Essentials Fixed 1Yr Oct25v3 tariff were promised savings of £163 a year.
As a result, Martin added: ";So for the short term, the mood music seems to say fixing ASAP is the safest route."
The cheapest fixed deal available right now can still save the average household £164 a year.
How do fixed deals work?
Fixed deals work to protect customers from bill hikes if Ofgem were to increase the price cap in the future.
Customers on their supplier's standard variable tariff see their energy prices change every three months, as these are tied to Ofgem's price cap.
However, those who lock into a fixed energy deal are charged the same gas and electricity rates throughout the contract's term.
Of course, doing so carries a slight risk of you paying more than those on the standard variable tariff if Ofgem's energy price cap were to fall within your deal's term.
The price cap is reviewed every three months in Oct, Jan, April and July, and can go up or down depending on what's happening in the wholesale energy market.
Since October 1, those on the standard variable tariff (SVT) have had their rates capped by Ofgem at the following levels:
- 5.48p per kilowatt hour (p/kWh) for gas
- 22.36p per kWh for electricity
- A standing charge of 31.66p per day for gas
- A standing charge of 60.99p per day for electricity
- For a typical household that uses an average of 11,500kWh of gas and 2,700kWh of electricity every year, these rates will cap bills at roughly £1,717 .
As this is only an estimate for a typical household, if you use more energy, you'll pay more.
"The best deals offer savings of over £150 a year for households with average energy usage.
"Energy prices are forecast to fall by just 1% from January, so now could be a sensible time to lock in a cheaper fixed rate to keep your bills lower this winter."
Outfox the Market is currently offering the cheapest deal on the open market right now.
Its Fix'd Dual Oct24 v2.0 tariff costs a typical household £1,553 a year.
This means it is £164 cheaper than Ofgem's October price cap.
It comes with a £25 exit fee per fuel or £50 if you lock in with a dual fuel tariff.
Octopus Energy's 12M Fixed October 2024 v1 costs £1,566 a year - £151 less than Ofgem's October price cap.
Co-op Energy's 12M Fixed October 2024 v1 matches the Octopus Energy deal.
Both these tariffs come without exit fees.
Outfox the Market, Ovo Energy and British Gas fixes are available to those with or without a smart meter.
Other firms may offer offer prices which beat those in the table above.
But, these often cost customers more by forcing them to take out an extra service, like boiler cover, which isn't always necessary.
Remember to always compare prices before switching, as energy tariffs vary widely, and costs differ depending on where you live.
What are the alternatives?
Customers unwilling to commit to long-term fixed energy deals may want to consider flexible tariffs.
Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: "These will almost always be at or below the price cap."
For example, E.ON Next's Pledge variable tariff offers a fixed discount of around three per cent on the price cap rates for 12 months.
It will save the average household around £50 a year but comes with a £50 exit fee if you switch before the year ends.
The deal is available to both new and existing customers.
EDF Energy's Ensure Tracker works in a similar way and offers a £50 discount off the price cap's standing charges for 12 months.
For a bigger reward but at a higher risk, Octopus Energy offers two variable tariffs which track wholesale gas and electricity costs.
Customers on the Octopus Tracker see their prices change daily, but unit rates have remained consistently lower than the price cap in recent months.
READ MORE SUN STORIES
The Agile Octopus tariff works similarly to the Octopus Tracker, but the main difference is that the former's prices change every half hour.
Remember that those wishing to switch to any of these tracker tariffs must have a smart meter.
What energy bill help is available?
THERE'S a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don't think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have grant schemes available to customers struggling to cover their bills.
But eligibility criteria varies depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don't need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill, and some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you're struggling.
Get in touch with your energy firm to see if you can apply.