Martin Lewis has shared new tariff deals being offered to some existing consumers across the UK which could help millions of households reduce the impact of the next Ofgem price cap due to kick in on October 1.
New predictions announced earlier this week suggest an increase of £1,000 in the autumn, a rise of 51%, which will set the cap at £2,980.
As usual, the consumer champion is at the forefront of number crunching and sharing the latest updates in an effort to help as many households as possible across the country through the cost of living crisis. He has now updated his essential ‘Is it time to fix my energy bill or should I stick on the price cap?’ blog on MoneySavingExpert.com (MSE) and shared his new ‘magic number’ for all existing energy customers to consider before making any tariff decisions.
Martin explained: “Many should be taking action, not because there are great deals out there, but because the latest analysis is the future looks even WORSE, with the price cap likely to rise even more than we previously thought. This means some costly fixes look like they may now be winners.”
He continued: “The UK energy market is broken. The theory is we're meant to gain from competition, but there hasn't been any - instead we have effectively regulatory-enforced high prices.”
Unfortunately, there are still no options available for households on prepayment meters.
Martin and the team at MSE have created a handy guide to navigating the energy crisis to help people understand why prices are going up and what options are available - read the full guide here.
How the price cap affects millions of households
Until February this year most people may have heard of the Ofgem energy price cap, but paid little attention to it, simply because when one fixed tariff deal was ending there were a ton of deals to choose from, easily found and selected using a comparison website.
But, due to the soaring price of wholesale gas and the situation in Ukraine, these offers disappeared and energy firms raised their prices to the maximum daily standing charges and unit rates allowed by the regulator - the price cap.
MSE warns that some 70 per cent of the UK is now on the price cap, which you are automatically moved on to if a previous fix deal ends, or your energy firm has gone bust and Ofgem has moved you to a new supplier.
Martin’s new ‘magic number’
With the predicted £2,980 price cap coming in October, Martin’s new ‘magic number’ to watch for is 45%.
The financial guru explained: “If the predictions are right, on average you'll pay 41% more over the next year than you do now.
“Of course, some of this is crystal-ball gazing and averaging, but overall my best guess, as a rule of thumb, is...
“If you're offered a year's fix at no more than 40% above your current price-capped tariff, or 45% more if you very strongly value budgeting certainty, it's worth considering.”
However, he warned that this isn’t an “exact science”.
Martin explained: “Fixing below this point is still not a slam dunk, I can't promise I've got this right, there are too many unknowns, just that this is my best-guess with the information I have at the moment.”
You can watch a video of Martin explaining why this might be a good option, here.
New deals for existing customers
The easiest and quickest way to find out if your energy supplier is offering existing customers a fixed deal is to contact them and ask.
MSE explains that these deals aren’t made public and their data is reliant on customers sharing details with them to help other people save some money during the cost of living crisis.
Below is a summary of fixed tariff deals by supplier, full details about offer terms and early exit fees can be found on MSE.com.
Just be aware, these new tariff deals are higher than the current price cap, but should result in the rates being lower than the new predictions for the October price cap of £2,980.
- British Gas: 37% more than current cap, one-year fixed deal ends in July and not available to all existing customers
- EDF Energy: 42% more than current cap, only available to existing customers on its standard and default tariffs
- E.on / E.on Next: 42% more than current cap, available to all existing customers - be aware, a couple of the members of our Money Saving Scotland Facebook group have said these offers are no longer available
MSE also explains how all the existing customer deals are above the current price cap, but will essentially reduce the impact of the October rise.
Always remember to do your own research into energy deals and compare how an increase now will affect your current household budget.
To keep up to date with the energy crisis, join our Money Saving Scotland Facebook group here, follow Record Money on Twitter here, or subscribe to our twice weekly newsletter here.
