Martin Lewis explained whether he thinks it’s worth the British waiting until July to fix their energy.
Fixed energy tariffs have not been competitive over the past two years, but with Ofgem’s energy price cap set to rise this autumn, many people may be wondering if now is the best time to fix it.
The energy price cap fell by 12.3 per cent to £1,690 a year on April 1 and will be reduced again from July 1, but there are concerns that energy costs will rise later. Between 1 July and 30 September 2024, the energy price cap is set at £1,568 a year for a typical household using electricity and gas and paying by direct debit.
Cornwall Insight said it expects prices to rise by 12 per cent from October, causing many to consider an energy fixed deal.
In MoneySavingExpert’s Money Tips Email, Martin Lewis and his team have compiled a list of the cheapest single repairs, and Brits can get a deal that’s nine per cent less than the current price cap.
For those who value price certainty, now may be a “strong correction time.” Ecotricity has a nine per cent reduction in the price cap – meaning households can save around £329.
Cornwall Insight said it expected prices to rise by 12 per cent from October,
BYE
When asked if it was worth waiting until July for the price cap to drop, the money-saving expert explained that the question is often “based on confusion”.
The energy price ceiling will change in July, but this will only affect the firm’s standard variable tariff; it does not affect repairs as they are not limited.
He said: “The rate you can set depends on how cheaply the retail energy companies can buy power at the time they offer the fix. We have no idea what it will be in July. It could be cheaper than now, it could be more expensive – it’s world markets, it has virtually no impact, it’s based on PAST wholesale prices – so it’s completely disconnected.
“Obviously, when the price cap moves, the difference between its price and the cost of repair changes (and firms can factor that into the margin of their pricing decisions in terms of how cheap they need to be to gain market share. ).
“Remember, you’re fixing for a year (or longer) and each price limit period only lasts three months. So the spot price is only a quarter of the decision anyway.
“That’s why we try and base our rating on whether you save on Cornwall Insight’s forecasts for next year. So if you want to correct because the gap looks decent now, it’s a decent bet at the moment.”
Even with a price cap, the cost people will pay will vary by region and payment method.
As there are no changes to fixed charges and the price drop only applies to unit rates, higher users will save relatively more than lower users.
From July, the price cap will drop by seven per cent, so £100 will now cost £93.
The price cap is expected to rise by 12 per cent from October, so £100 will now cost £104.
From January 2025, the MSE team predicts the price cap will remain the same, so the current £100 would then cost £104.
The forecast average for the full next 12 months is two percent higher than now, which means it may be an ideal time to correct for some.
It means some people would pay £1,427 for an average year’s use if they fixed now, id prices fall to £1,756 in October under current forecasts, people could save £329 against the price cap.
The cheapest independent energy repairs according to MSE:
It is the cheapest One year Ecotricity Green repair. This is in limited supply as only 2,000 switches are available. It is for:
- New and existing customers
- Dual fuel / electricity only / gas only
- Monthly direct debit only
- Need to have/apply for a smart meter
This deal is an average of nine percent below the price cap.
Next is Octopus 12 month patch May 24 v3 for new and existing dual fuel or electricity only customers
This deal does not require a smart meter and is on average seven percent less than the price cap.
Ovo Energy 1 year fixed is for:
- New and existing customers
- Dual fuel or electric only
- Monthly direct debit only
- Need to have/apply for a smart meter
That’s five percent less on average.
EDF Essentials 1 year fix June 25 is for:
- New and existing customers
- Dual fuel or electric only
- Monthly collection / cash / check or
When paying up front, if someone has a smart meter, it is on average three percent less than the price cap.
This is not a fix:
E.on Next Pledge 1yr trackr is for:
- New and existing customers
- Dual fuel or electric only
- Monthly direct debit only
- Need to have/apply for a smart meter
This deal tracks three percent below the price cap, so if the cap gets cheaper, it gets cheaper too.
It is a discounted Price Cap tariff and can be a good option if one is not sure what to do.