Martin Lewis says ‘now is the time to fix’ energy bills as three major providers launch cheap deals --[Reported by Umva mag]

THREE major energy providers have launched cheap fixed deals that could save you 7% on October’s bills, Martin Lewis revealed as he advised consumers to consider switching to save.

The money saving expert said British Gas, E.on and Outfox had all launched cut price one-year deals.  

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The fixed deals are up to 7% less than the October price cap, so would limit the 10% bill increase most will see.

Energy bills are set to rise for millions of households this winter after energy regulator Ofgem confirmed the new price cap, which comes into effect on October 1.

The cap will rise from the current rate of £1,568 a year to £1,717, which means the average household paying by direct debt for dual fuel will see their annual bill go up by £149, or around £12 a month – a 10% increase.

Advising it might be time to fix Martin Lewis said: “For many who are risk averse, it’s a good time to fix as the price cap’s currently predicted to stay near that higher October level for the next year.”

Around 29 million households are on standard variable tariffs which are affected by the price cap, according to Ofgem.

The price-cap limits how much providers can charge per unit of energy but does not restrict the overall total of your bill – so the £1,717 figure is the estimated cost for average usage.

The cap is reviewed every three months, so if you’re on a variable tariff your bill will rise and fall in line with it.

If you move to a fixed tariff your energy rate will be fixed at that rate for the duration of the contract.

The tariffs work by charging customers the same gas and electricity rates for the entire term, protecting customers from future bill hikes.

Although it’s also worth baring in mind that if the price cap falls those in fixed contracts wont benefit.

So, if you’re thinking of moving to a fixed deal you need to consider what is likely to happen over the duration of the contract term.

Martin Lewis has advised that the price cap is unlikely to fall in the next year, so it could be a good time to switch to a fixed term.  

Based on current predictions he said: “If you find a fix for up to 11% more than the current (July to Sept) price cap (or 1% more than October’s), it’s predicted you’ll save over the year compared with staying on the price cap.”

Outfox the Market is currently offering a fixed contract that is 7% less than the October price cap.

E.on and British Gas both have fixed price dals that are 5% less than the October price cap.

The exact terms of the deals and which is best for you depends on where you live and how much energy you use.

Consumers can use Money Saving Expert’s Cheap Energy Club comparison service to check their cheapest option.

Before you switch energy providers or make changes to your contract it’s important to check all the details.

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.

Many more households are anxious about heating costs this winter after the government restricted access to the Winter Fuel Payment.

Following the change millions fewer pensioners will receive the benefit, but there is a chance you could be eligible if you can claim Pension Credit.

How do fixed deals work?

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 predict that the energy price cap will rise again in January.

From October 1, those on the standard variable tariff (SVT) have their rates capped by Ofgem at the following levels:

• 5.48p per kilowatt hour (p/kWh) for gas
• 22.36p per kWh for electricity
• A standing charge of 31.66p per day for gas
• A standing charge of 60.99p per day for electricity

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.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

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