Energy bills will rise by two per cent from October 1 for seven million homes on the price cap.
Consumer champion Martin Lewis is urging millions of households on the standard tariff to switch to a fix to beat the price cap which kicked in at midnight on October 1. In a special edition of the Martin Lewis Money Show Live on Tuesday, the financial guru dished out invaluable advice to parents and students starting college or university this Autumn, but also explained how most energy firms are offering fixed tariffs which beat the ‘pants cap’.
An estimated seven million households on the standard tariff – with typical average usage – will see annual bills increase from £1,720 to £1,755 from October 1 – a rise of £35 over the coming year. The increase will see energy bills increase by around £2.93 a month for the average household, leaving a home on a default tariff paying £102 for what currently costs £100 per month.
However, Martin explained how switching tariffs is ‘guaranteed’ to save around £300 over the next year as most deals are locked in for 12 months.
READ MORE: Households urged to take action today as new energy price cap kicks inREAD MORE: Crucial winter heating payment deadline next week for nearly 900,000 pensioners
He told STV viewers that the cheapest fixes are 15 per cent lower than the new price cap, which is set to remain higher until the end of March before dropping off over the warmer months.
Martin showed the studio audience a graph which illustrated current price cap predictions for the coming months, but it also showed how fixed tariffs are well below those forecasts, making it a “no brainer” to switch.
He said: “The next price cap is predicted to be down half a per cent, now the important thing to understand is we are already nearly halfway through the assessment period for the January price cap so the predictions now they’re not solid but they’re pretty close.
“An easy way for me to frame it so you understand what’s going to happen is it’s going to go up two per cent on October 1 then it’s roughly going to stay there until the end of March – the end of the high use winter period where we spend most on energy it’s going to go up and stay there after that.”
He continued: “Today’s cheapest fix is 15 per cent below the October price cap, that’s because rates have gone down a little bit and fixes move with the current price whereas the price cap is based on a timeline, that’s around just under £300 a year cheaper for somebody on typical bills.
“We know now you’re almost certain to be saving until the end of March after that the probabilities you’ll still be saving substantially you might be saving less but you’re gonna be saving over the next year the cheapest fixes or an absolute no brainer.
“The price cap is a ‘pants cap’ get off it, your cheapest fix depends on where you live and how much you use so go onto a whole of market comparison site – that’s one that shows you all the tariffs by default – find your cheapest fix get off the price cap.”
Martin also covers the price cap and the best fixed tariffs in this week’s MoneySavingExpert newsletter, you can also catch up with The Martin Lewis Money Show Live on the STV Player.
Seven things to check before switching energy supplier
Advice Direct Scotland has identified seven key considerations for anyone planning to switch. The charity is also urging those worried about their bills or struggling with energy-related debt to contact its team of experts for free, impartial advice.
Energyadvice.scot provides free, impartial, and practical advice on energy bills to anyone in Scotland. Advisers can be contacted at www.energyadvice.scot and on 0808 196 8660, Monday to Friday, 9am to 5pm.
Whether switching suppliers will save someone money depends on their individual circumstances. Below are some key things to think about before making a decision.
Understand your current plan
Customers should review their annual energy consumption in kilowatt hours (kWh), as this helps with comparing tariffs. They should also establish what kind of tariff they are on.
Tariffs can vary and include options such as fixed rate, variable, and economy 7 or 10, which have different energy rates at peak and off-peak times. Households should ensure that their current set up and meter is compatible with their new supplier.
Research new suppliers and tariffs
When you’re ready to look for a new deal, it’s important to use an Ofgem-accredited price comparison tool. There is a list on the Ofgem website, available here.
When considering different suppliers, look for reviews or star ratings for customer service and reliability as well as price. You should also consider what matters most to you – is it price, renewable energy options, or fixed-rate stability?
Customers should also compare daily standing charges as well as unit rates, as these can vary depending on the supplier and the type of tariff.
Check eligibility and benefits
Make sure your new supplier is part of any government schemes you rely on, like the Warm Home Discount.
If you have a smart meter, check it will work with the new supplier. If it doesn’t, you might end up with inaccurate readings and estimated bills.
If you owe money to your current supplier, you can still switch if the debt is less than 28 days old. The amount owed will be added to your final bill. But if you’ve been in debt for more than 28 days, you’ll need to clear it before switching. The exception is for prepayment meter customers, who can switch even if they owe up to £500 for gas and £500 for electricity.
Understand the switching process
Switching usually takes 21 days, including the cooling-off period, so any change will not be immediate. You have 14 days to cancel a switch after signing up if you change your mind.
If your new supplier is signed up to the Energy Switch Guarantee, which aims to make the process as fast and simple as possible, you should be moved onto your new deal within five working days.
Don’t forget early exit fees
Customers should check if their supplier charges an exit fee for switching before the end of the contract. In some cases, this cost might outweigh the benefits of moving to a new deal.
If you can switch penalty-free, you should also ensure that your old supplier provides a final bill and refunds any credit you might be owed.
Be aware of scams
As more people consider switching suppliers, there is inevitably an opportunity for scammers to take advantage. Always steer clear of unsolicited offers made over the phone or at your door.
You should use trusted channels for switching and be cautious of deals that seem unrealistically cheap. If it sounds too good to be true, it probably is.
Consider your future energy needs
Be aware that your energy use – and potentially your income level – might change in the future and you might not always use the same amount from year to year.
Ideally, you should choose a plan that aligns with what you can comfortably afford and does not lock you in for too long before you can switch again without a penalty.
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