Martin Lewis returned early from his summer break last week to help millions of people understand how the new energy price cap will affect their household budget this winter. Ofgem confirmed on August 26 that the standard tariff will rise by more than 80 per cent from £1,971 to £3,549 on October 1, pushing many family finances to the brink.
The consumer champion appeared on several TV and radio programmes explaining the implications of the increase and urging the UK Government to step up its financial support - a sentiment echoed by Ofgem, energy suppliers and charities. In this week’s MoneySavingExpert.com newsletter, the financial journalist has shared a dozen ‘energy hike must-knows’, including how people will pay £273 per year even if they use no energy, how Direct Debit is the cheapest way to pay your bills and whether you should fix.
Writing in the newsletter, Martin said: ‘I've been trying to raise the alarm for months, shouting that action's needed to prevent a potential winter price catastrophe. Well on Friday, that catastrophe crystallised, without any new firm mitigating plans in place.”
The founder of MoneySavingExpert.com described Ofgem’s new price cap as “vomit-inducing” warning that forecasts of a further increase in January will be “simply unpayable for a decent chunk of the country in fuel poverty”.
One question that most bill payers are keen to get an answer to is whether or not they should fix their tariff.
In a video shared on social media and YouTube last week after the price cap announcement, Martin explained that there are no fixed tariff deals on the open market just now and the only way to find out if one is available is to contact your supplier directly.
He advised that if your supplier offers you a fix that is less than two-and-a-half times the new price cap, some 145% higher than what you’re currently paying then it may reduce costs ahead of next year’s grim forecasts.
And he addressed the question again in this week’s newsletter, but advised there is a lot of “crystal ball gazing”, urging people to remember that he and the MoneySavingExpert team “can never be, and have never promised to be, right”.
He said: “ I never thought I'd write this... at the moment the predictions are, on average, over the next year, that the price cap will be roughly 145% more than it is now (ie, two and a half times). So if you can find a fix at less than that, it may be worth it.”
Martin also suggested people considering taking a fix should check his ‘Should I fix and what are the best fixes? guide’ for the latest details - read it here.
The consumer website also has a handy P rice Cap Calculator which allows you to enter your usage or how much you spend, plus your region, and it will provide an estimate of what your energy bills will be from October - this tool is only for Direct Debit tariffs.
Price cap per year from October by payment method
Martin explained on the video how the way people pay their energy bills results in a different price cap - just remember, these only apply to those on the standard tariff, not a fix.
From October 1, annual bills will increase by the following:
- Dual fuel (gas and electricity) Direct Debit: £3,549 (up 80%)
- Prepayment meter customers: £3,608 (up 79%)
- Paying by receipt of bills: £3,764 (up 79%)
You can read all 12 Martin Lewis energy need-to-knows on the MoneySavingExpert.com website here.
To keep up to date with the latest energy news, join our Money Saving Scotland Facebook group here or subscribe to our newsletter which goes out three times each week - sign up here.
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