With the energy price cap and volatile gas prices still making news headlines, consumer champion Martin Lewis is urging customers of two the biggest energy companies to check if they can fix into an energy deal that is less than the current price cap. He urged customers of British Gas and E.On to check their current deals.
Martin was addressing concerns about rocketing energy bills following the Office of Gas and Electricy Markets (Ofgem) boss's warning that the price cap could rise to £2,800 in October. Energy bills have already shot up for millions of households across the UK after the Ofgem hiked the April price cap to just under £2,000.
During his ITV Martin Lewis Money Show Live programme, Martin was asked by one viewer if now is the time to lock into a fixed rate energy deal. The MoneySavingExpert founder explained that there are currently no open-market rates that are cheaper than the current price cap - but you may be offered a cheap rate from your existing provider. The margin Martin gave for considering locking in now was 30% above the current price cap - or 35% if you’re after price assurance.
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He said: “[The price cap] is going to go up 42%, we’re predicting in October - and then even though the new price cap only lasts three months, the latest estimates I’ve had from analysts is the January price cap for the next three months is going to be the same. So we’re expecting it to be around £2,800 until next April - it’s horrible isn’t it - then it is going to drop a little bit.
“When you plug all that in to where we are now - four months on this price cap, then six months on the next price cap - effectively, if you can find a fix below around 30% of the current price cap, then it’s probably worth doing. You can add 5% on top of that because you get price assurity of knowing what your prices are.”
The two energy firms Martin highlighted as ones that are reportedly offering existing customers fixed rates below 30% of the current price cap are British Gas and E.On. As these rates are not advertised online, you have to be a customer with these firms already to be offered them.
“We’re seeing existing customer fixes where an existing company is offering you a cheap fix,” explained Martin. “They don’t have to publish those rates, unlike those open market ones, so I don’t have them. I ask people to feed them in and we estimate them.
“I believe there is an E.On two-year fix that people are being offered and British Gas one-year fix that people are being offered that are within less than 30% [of the price cap]. “If you’re being offered those, you may want to look into it.”
The price cap for those on default tariffs paying by direct debit increased by £693 from £1,277 to £1,971 last month. This marked an eye-watering rise of around 54% as the UK continues to struggle against a cost of living crisis.
