Martin Lewis urges people to lock in energy fix to avoid overpaying on new price cap
Martin Lewis is urging people on the price cap to switch to a fixed tariff as they will probably be overpaying on energy bills this summer, despite the seven per cent drop in gas and electricity prices. Writing in the latest edition of the MoneySavingExpert (MSE.com) newsletter this week, the consumer champion shared a comprehensive guide to lowering your energy bills by a further 10 per cent.
He explained that some two-thirds of homes in Scotland, England and Wales are on their energy supplier's 'bog-standard default tariff, which means its price is dictated by the regulator, Ofgem's Price Cap'.
Along with comparable fixed tariff deals, the financial guru answers the most common questions and concerns people have about moving off the price cap, something he has dubbed the 'Pants Cap'.
Martin wrote: 'The good news is that the Price Cap has been cut by 7 per cent today, meaning for every £100 you were paying, for the same energy use you'll now roughly pay £93.
'Yet that's still 10 per ecnt higher than this time last year, and the current prediction is it won't get much cheaper. So, frankly, the Price Cap still looks like a Pants Cap - if you're on it, you're likely overpaying.'
You can work your way through Martin's full step-by-step guide to lowering your energy bills and locking in the best deal on MSE.com here.
Energy bills have fallen for households as latest forecasts predict a further on eper cent drop in October due to easing Middle East tensions.
Analyst Cornwall Insight expects the cap to fall to £1,698 a year from the current £1,720 for a typical dual fuel consumer, but stressed 'significant uncertainty' remained with two months until the final figure is announced.
The price cap sets the limit on how much firms can charge customers per unit of energy, but does not limit total bills because householders still pay for the amount of energy they consume.
The latest cap is £660 (28%) lower than at the height of the energy crisis at the start of 2023 when the UK Government implemented the energy price guarantee.
However, prices remain elevated at £152 or 10 per cent higher than the same period last year.
Cornwall Insight said its latest forecast reflected wholesale prices falling as military tensions in the Middle East had eased. But it said the cap still remained hundreds of pounds above pre-pandemic prices, even when adjusting for inflation.
Furthermore, there was little indication that prices would reduce substantially over the next few years, it warned.
It is predicting a further small fall in January, with prices rising slightly in April, but said market volatility, geopolitical risks and potential changes - and additions - to the non-wholesale components of bills meant forecasts remained changeable.
Cornwall Insight principal consultant Craig Lowrey said: 'While any reduction in energy bills is welcome, we must not let small fluctuations in the price cap mask the bigger picture.
'Households are still paying far more for their energy than they were before the pandemic, with the current outlook showing little prospect of a meaningful drop over the next few years.
'Our reliance on international energy markets means that while we have a range of supply sources, this brings with it a vulnerability to global events and price shocks – something that was evident in June. If we want to bring real stability and affordability to the energy system, we need to continue, and speed up, our transition to homegrown, renewable power.
'This transition will not happen overnight, and there will be short-term costs along the way. However, in the long-term, building a more self-sufficient energy system is the only way to help shield consumers from international volatility and put us on a more secure and sustainable path for the future.'
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