Martin Lewis shares how to get ahead of £221 July energy bill rise
Currency expert Martin Lewis has shared his tips for softening the blow of next month’s massive energy bill increase caused by ongoing conflict in the Middle East.
Ofgem’s energy price cap will rise by £221 annually to £1,862 from July, the energy regulator has confirmed. The 13 percent increase marks the highest level in more than two years and was driven by a surge in oil prices caused by the US-Iran war that started in February.
The energy price cap is the maximum amount that suppliers can charge households for each unit of energy at the standard variable tariff, which still includes most of them. It is expressed as the annual bill of an average house.
Most financial experts, including Ofgem itself, recommend that households consider a fixed-tariff energy deal if possible. However, the US-Iran market saw fewer of these than in previous months.
A flat-rate energy agreement guarantees customers will pay a set rate for their energy over a set period of time, usually a year.
Mr. Lewis advises that the price cap is “time-lagged” because it “reflects wholesale energy costs two to five months ago, so it is slow to rise and slow to fall.”
“So the Middle East conflict will finally be reflected in most people’s energy bills from July, when the cap will rise by 13 percent.”
He added: “The increase only applies to companies’ bog standard tariffs. The adjustments are not limited to the price cap so it will not increase. So if you are in a Price Cap, consider getting out of this if possible.”
Those who already have a fixed deal may also want to consider one of the few other tariffs on the market if it is cheaper or if their tariff is due to expire soon. However, many have exit fees that can be per fuel.
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For example, a dual tariff that comes with both gas and electricity and has a £50 exit charge per fuel will have a general early termination charge of £100.
There are currently three fixed energy tariffs on the market recommended by Mr Lewis and his Money Saving Expert service.
The company offering the biggest savings over the energy price cap comes from Ecotricity, whose 12-month EcoFixed deal is 3.8 percent cheaper than the current price cap and 15.2 percent below the July rate.
Next up is Outfox Energy’s Fix’d Dual 12-month deal; 2.1 percent below today’s limit and 13.7 percent below July’s limit.
Those looking for a bigger name provider can opt for E.on’s 12-month offer, which is 2 percent below the current cap price and 13.6 percent below the next cap price.
Mr Lewis advises: “As your winner depends on region and usage, the simple way to do this is to compare the whole market and get a fix below the current Cap. Do this and start saving now – and from July today’s cheapest fix will be 15 per cent cheaper than the new higher Cap.”
