Money Saving Expert Martin Lewis has issued a bleak warning to all UK bill payers. He has warned that people need to brace themselves for further costs.
It comes after experts have predicted a higher rise to the energy price cap in October. According to Cornwall Insight, the average gas and electricity bill in England, Wales and Scotland could reach as high as £3,615 by January.
Manchester Evening News reports this new prediction is hundreds of pounds higher than previously thought. Speaking to BBC Breakfast, the company said that the average bill could reach as high as £3,358 from October and £3,615 from January.
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Cornwall Insight's principle consultant, Craig Lowrey, told the programme: "However, while the rise in forecasts for October and January is a pressing concern, it is not only the level – but the duration – of the rises that makes these new forecasts so devastating,” he told the programme.
“Given the current level of the wholesale price, this level of household energy bills currently shows little sign of abating into 2024.” He added: "While the Government has pledged some support for October’s energy rise, our cap forecast has increased by over £500 since the funding was proposed, and the truth is the £400 pledged will only scratch the surface of this problem.”
MoneySavingExpert has warned of the £3,358 increase, and has flagged some deals that are cheaper than the predicted October price cap.
The consumer rights website explains that, on average, you’ll be paying 72% more over the next year than you do now, based on current predictions. MSE suggests you should consider fixing into an energy deal if you're offered a one-year fix at no more than 70% above your current price cap tariff.
Those who “very strongly value budgeting certainty” might want to consider fixing at a slightly higher 75% above the price cap tariff. Of course, prices could change and there is no way for certain to know how the price cap might fluctuate over the next year.
“This isn't an exact science – do watch my video explainer from a couple of months ago if you want to understand more,” said Martin. Fixing below this point is still not a slam dunk, I can't promise I've got this right, there are too many unknowns…
“This is my best-guess with the information I have at the moment.” The cheapest rates are normally “customer-only” deals which aren’t available on the open market - this means you won’t find details of them online.
It is worth speaking to your energy provider to see what deals they have on offer right now - but keep in mind the best rates could be pulled quickly. MSE flagged the E.on Next: Next Online v17 one-year fix - which is only available to existing customers - as being 67% more than the current price cap (£3,297 a year).
It said the cheapest open-market rate available right now is from Utility Warehouse - but you have to take out other products as well. This means it might not be worth it for all households, and it is harder to work out if you’d be better off as you need to factor in these costs and savings too.
The Utility Warehouse "Green Fixed 33" one-year fix is on average 45% more than the price cap at £2,850 per year for typical use. To get access to this fix, you will need to take out broadband, SIM-only mobile contract or boiler and home cover with Warehouse.
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