Martin Lewis’ MSE has issued a warning to Brits about rising energy bills and revealed tips on how to lock in a lower rate today.
It comes just hours after the energy regulator Ofgem confirmed the new energy price cap, which affects the 29 million households on the standard variable tariff.
The cap will rise from £1,568 to £1,717 on October 1.
It means a typical household will see their annual duel-fuel bill rise by £149.
In MSE’s latest newsletter, they explained how households can lock in a lower energy rate for the year.
The expert finance team urged Brits to use their Cheap Energy club comparison tool to help find the cheapest options for their postcode and usage.
Households risk paying a whopping 11 per cent more on their energy bills next year than they do now if they don’t opt for a cheaper rate.
The cheapest standalone fix on offer is 6 per cent cheaper than the October 1 Price Cap, according to the MSE.
However, it is still 3 per cent more than the current cap, meaning you’ll still pay more for the next month.
Brits will have to act quickly as many of the cheap fixes are disappearing from the market, the MSE added.
They said: “Waiting may mean you lock in at a higher rate.
“So our best guess is if you’re doing this for peace of mind, sooner is likely safer.”
Several major suppliers, including Outfox the Market, are currently offering fixed deals that are cheaper than October’s energy price cap.
Richard Neudegg, director of regulation at Uswitch.com, said: “The news of a 10% rise in energy rates from October is a harsh reminder of how quickly the energy market can reverse course.
“The good news is, households don’t have to put up with the uncertainty of rising bills, as right now, there are fixed deals available that are cheaper than the new price cap.”
Suppliers often reprice or remove their fixed energy tariffs from the market if wholesale gas prices are forecast to rise.
So it’s wise to compare the best offers now to ensure you get the best deal before prices rise in October.
Here’s everything you need to know about fixing your bills.
Fixed deals work to protect customers from bill hikes if Ofgem were to increase the price cap in the future.
Customers on their supplier’s standard variable tariff see their energy prices change every three months, as these are tied to Ofgem’s price cap.
However, those who lock into a fixed energy deal are charged the same gas and electricity rates throughout the contract’s term.
Of course, doing so carries a slight risk of you paying more than those on the standard variable tariff if Ofgem’s energy price cap were to fall within your deal’s term.
However, this risk is minimal as analysts at Cornwall Insight predict that the energy price cap will rise again in January.
EDF Energy has launches a brand new Ofgem price cap prediction tool on its website.
The energy company updates the tool with new information about changes to the cap on energy prices every Tuesday.
It also includes advice on how this affects your energy tariff choices.
You can find out more by visiting www.edfenergy.com/gas-and-electricity/price-cap-predictions.
From October 1, those on the standard variable tariff (SVT) have their rates capped by Ofgem at the following levels:
For a typical household that uses an average of 11,500kWh of gas and 2,700kWh of electricity every year, these rates will cap bills at roughly £1,717 .
As this is only an estimate for a typical household, if you use more energy, you’ll pay more.
But if you’re offered a fix that’s cheaper than October’s price cap prediction, it’s always worth considering.
Outfox the Market is currently offering the cheapest deal on the open market to new and existing customers.
Its Fix’d Dual Aug24 v4.0 tariff costs a typical household £1,592 a year.
This means it is £125 cheaper than Ofgem’s October price cap.
It comes with a £25 exit fee per fuel or £50 if you lock in with a dual fuel tariff.
Next is Ovo Energy‘s tariff, which costs a typical household £1,625 a year.
It comes with a £50 exit fee per fuel or £100 if you lock in with a dual fuel tariff.
Octopus Energy’s 12M Fixed August 2024 v3 costs £1,626 a year – £91 less than Ofgem’s October price cap.
Remember to always compare prices before switching, as energy tariffs vary widely, and costs differ depending on where you live.
Customers unwilling to commit to long-term fixed energy deals may want to consider flexible tariffs.
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.
EDF Energy’s Ensure Tracker works in a similar way and offers a £50 discount off the price cap’s standing charges for 12 months.
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.
For example, in the last 30 days, people living in Southern England on the Octopus Tracker paid a maximum of 22.5p per kWh for electricity and 5.22p per kWh of gas.
The Agile Octopus tariff works similarly to the Octopus Tracker, but the main difference is that 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.
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 £2,000.
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.
