MARTIN Lewis has issued an urgent warning for millions of energy customers offered fixed deals.
The founder of MoneySavingExpert.com has explained whether or not customers should consider fixing their bills.
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In the latest MSE newsletter, Martin said: “We’ve already seen a few limited existing customer-only fixed deals launch from British Gas, So Energy, E.on and Ovo, and we’re expecting more soon.
“We take you through what you need to consider if you’ve been offered a fixed deal.
“Based on current predictions, a fixed deal under July’s price cap looks to be a decent deal, while anything on or just above it could be worth considering if you value price certainty.”
It comes just a weeks after the energy regulator announced that typical gas and electricity bills will be capped at £2,074 a year from July 1.
This will take effect when the government’s Energy Price Guarantee, which limits the typical domestic energy bill to £2,500, expires in a month’s time.
The fall in Ofgem’s price cap will reward households battling the cost of living with a £426 annual saving.
Four major energy companies are now offering fixed deals to selected existing customers:
- So Energy 12 month fix from 1 July 2023 – £2,036 a year with typical use (£150 exit fee)
- British Gas Select Jul24 – £2,044 a year with typical use (£200 exit fee)
- E.ON Next Loyalty Fixed v3 – £2,050 a year with typical use (£150 exit fee)
- Ovo Energy 1 Year Fixed – £2,220 a year with typical use (£150 exit fee)
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These energy tariffs give customers bill stability over a set period.
By locking into a deal you can avoid bill hikes during its set period.
But you could end up being stuck paying more if prices fall in future so it’s important to assess the real value of these offers.
If you’re coming off a fixed energy tariff and don’t renew, you’ll automatically fall onto your supplier’s standard variable tariff (SVT).
And from July 1, Ofgem will introduce the following new rates for those on the SVT:
- 8p per kilowatt hour (p/kWh) for gas
- 30p/kWh for electricity
- A standing charge of 29p per day for gas
- A standing charge of 53p per day for electricity
For a typical household that uses an average of 12,000kWh of gas and 2,900kWh of electricity every year, these rates will cap bills at roughly £2,074.
But this is only an estimate for a typical household – so if you use more energy you’ll pay more.
Any fixed deal that’s under the typical rate for those on the SVT could be worth locking into, according to Martin Lewis.
However, before agreeing to a new fix it’s important to understand that Ofgem’s energy price cap will be reviewed again later this year.
The regulator used to set the price cap every six months. But since August last year, it now reviews the cap on unit rates for those on the default tariff every three months.
This means that annual energy bills may drop further into 2023 when the next price cap comes into force in October.
Energy experts at Cornwall Insight expect typical bills to fall again to £1,959.58 a year from October but they could then rise again to £2,026 a year from January 2024.
If you’re happy to stick on the standard variable tariff, we’ve calculated how much less you’ll pay each month from July 1 depending on the size of your household.
We’ve also previously listed 30 ways to cut energy bills now.
