Martin Lewis reveals easy way to save £100 on essential bill – but you need to lock in price now
MARTIN Lewis’ MSE has revealed an easy way to save £100 on an essential bill.
In the latest MoneySavingExpert newsletter Martin’s team explained that a “handful” of cheap energy fixes are currently on the market.
Average annual energy bills fell by 12% on April 1, for those on standard price-capped tariffs taking the average bill down from £1,928 to £1,690 a year.
But that doesn’t mean bills won’t rise again during the next two energy price cap assessments this year.
It also means fixed tariffs might creep up in price.
MSE has revealed that several of the cheap deals for fixed term contracts are actually cheaper than the current price cap, so it’s prime time to switch.
The team wrote: “Lock in a price undercutting predicted Price Cap.
“Many can switch, save £100+ and get peace of mind, though they may not be around long.”
The newsletter went on to explain that on average the price cap is predicted to drop a further 3% over the next year, based on the latest prediction by Cornwall Insight.
But since the predictions were revealed, the energy experts have said that things have got more expensive so the drop won’t be as big as predicted.
BEST ENERGY FIXES
In a bid to help readers tackle high energy bills, MSE has rounded up the best deals available right now.
The EDF “Essentials 1Yr May25 fix” tops the list and customers have been warned it likely won’t be around for long.
It’s around 7% less than the current price cap and is available for new and existing EDF customers.
Bear in mind it’s for dual fuel or electricity-only, plus you must pay for your energy via monthly Direct Debit or in receipt of bills or smart prepay
You also need to have or apply for a smart meter to be installed.
Next up is British Gas‘s one-year fix, also for new and existing customers.
MSE reckons it’s 5% less on average than the current price cap.
It’s available on dual fuel, electricity-only or gas-only. You must pay by monthly or quarterly Direct Debit or pay in receipt of bills.
Outfox the Market one-yr April 25 fix comes in third at 3% less on average
Both new and existing customers can bag the deal, but it’s for dual fuel monthly Direct Debit bill payers only
Plus it doesn’t require a smart meter.
Should I move to a fixed energy deal?
Customers who lock into a fixed energy deal are charged the same gas and electricity rates during the term of the contract.
This means that prices will stay the same throughout and customers won’t face larger bills even if Ofgem were to increase the price cap.
But this also means that if prices fall, you could end up paying more than a new price cap.
This is the current price cap rates on a standard variable tariff:
- 6.04p per kilowatt hour (p/kWh) for gas
- 24.50p/kWh for electricity
- A standing charge of 31.43p per day for gas
- A standing charge of 60.10p per day for electricity
A typical household uses an average of 11,500kWh of gas and 2,700kWh of electricity every year, these rates will cap bills at roughly £1,690.
But as this is only an estimate for a typical household – so if you use more energy you’ll pay more.
Any fixed offer that is lower than the current cap is always worth considering.
But be wary that annual energy bills may drop further into 2024 when the next price cap comes into force in July.
Analysts at Cornwall Insight predict that bills will drop again in July to around £1,560 a year, rise to £1,631 in October and dip again to £1,634 in January, but those are only estimates.
What's happening in the energy market?
The UK energy market has been pretty volatile for the past few years, which has meant that energy prices have rocketed for customers.
Energy customers in the UK saw dramatic increases in their bills thanks to wholesale energy becoming more expensive at the end of 2021.
This was due to various factors like high gas costs, and low wind energy generation.
High wholesale prices and increased general market volatility resulted in suppliers taking deals off price comparison websites.
Increase in wholesale electricity prices caused by rising gas prices – if gas prices rise, the cost of producing electricity in these power stations rises and the cost of the electricity rises in turn.
But prices have dropped recently and the price cap has been reduced from £1,928 to £1,690 from April 1.
While this is a good thing, prices are still higher than they were this time two years ago.
The one constant thing about the energy market is its fluctuation so it’s difficult to predict.
The next price cap July to October is set to be announced in May and will likely be lower than the current one.
It means it can be hard to predict whether opting for a fixed deal or sticking with a standard variable tariff will work out cheaper in the long run.
Generally, it’s a a bad idea to fix on anything higher than the unit rates or standing charges in your current deal, or for longer than a year.
By Ellie Smitherman – Consumer Reporter at The Sun
Other alternatives
If you don’t want to commit to a fixed tariff it’s always worth considering a variable tariff.
Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: “These will almost always be at or below the price cap.”
For example, E.ON Next’s Pledge variable tariff offers a fixed discount of around three per cent on the price cap rates for 12 months.
It will save the average household around £50 a year but comes with a £50 exit fee if you switch before the year ends.
The deal is available to both new and existing customers.
For a bigger reward but at a higher risk, Octopus Energy offers two variable tariffs which track wholesale gas and electricity costs.
Customers on the Octopus Tracker see their prices change daily, but unit rates have remained consistently lower than the price cap in recent months.
The Agile Octopus tariff works similarly to the Octopus Tracker, the main difference is the former’s prices change every half hour.
Remember that those wishing to switch to any of these tracker tariffs must have a smart meter.
What energy bill help is available?
THERE'S a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don’t think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have grant schemes available to customers struggling to cover their bills.
But eligibility criteria varies depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £1,500.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don’t need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill, and some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you’re struggling.
Get in touch with your energy firm to see if you can apply.
How to find a good energy deal
To find a good deal you will first need to get an estimate of how much energy you are using every month.
It’s good to do a meter reading regularly to track this or install a smart meter.
It is worth sending these to your energy supplier and checking your bill accurately reflects what you are using.
Next, you’ll need to decide how much certainty you want over the price you pay.
You’ll then need to choose a fixed or variable energy tariff.
To find what is right for you have a look at price comparison sites to see what is the best deal for you and how much you could save against your current deal.
Bear in mind these won’t have every deal on the market so you still might miss out.
If you find a deal you like reach out to the supplier directly to see if that’s the best price they can offer.
If you are looking to switch use an automatic switching service as they do most of the leg work for you.
Meanwhile, millions of households could be forking out even less within months.
Plus, Martin Lewis has warned credit card holders to take advantage of a “core weapon” to avoid high-interest charges.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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