MARTIN Lewis has issued an urgent warning to hundreds of thousands of households who face rocketing energy bills.
The founder of MoneySavingExpert.com said those who locked into a fixed energy deal within the last year could see their charges jump.
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In a recent post on Twitter, Martin said: “On Saturday, those who locked in on costly fixes – usually around one year ago – lost the government’s energy price guarantee subsidy.
“If so you will see rates jump to substantially more than the price cap rates.
“So check if your fixed rates have changed. If so, and it’s materially higher than the cap rates you should consider ditching the fix and moving to your provider’s price cap (though factor in any early exit penalties).”
Households on 274 different fixed energy tariffs are directly affected.
Over 29million households who aren’t on fixed energy deals are covered by Ofgem’s energy price cap which caps typical bills at £2,074.
The government has also been subsidising certain fixed energy bills to ensure that they remain in line with the charges issued to those on the standard variable tariff (SVT).
However, this protection comes through the government’s energy price guarantee which no longer protects households who are on the SVT because its rate is higher than Ofgem’s price cap.
The energy price guarantee rose from £2,500 to £3,000 a year for the average household.
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But because it’s still used to subsidise some fixed energy deals around 1.5million households will see their bills spike by £500 a year, according to Future Energy Associates.
Households affected are customers of a range of firms such as Scottish Power, EDF, Octopus Energy, British Gas, Utility Warehouse, SSE and So Energy.
And while households on 52 of the tariffs affected can leave with no penalty, others may be charged to exit their deal early.
These exit fees can range from £50 to £400.
A spokesperson for the End Fuel Poverty Coalition said: “This news will send shockwaves through hundreds of thousands of households who thought they were doing the right thing by fixing their energy tariffs.
“It turns out they’ve been taken for a ride by energy firms who may now be charging them more for their energy than people on the Ofgem-fixed standard variable tariff.
“Energy firms must work immediately to end this discrepancy and bring all tariffs into line with the Ofgem price cap or waive exit fees for these customers.”
Should I leave my fix?
This depends on how much your unit rates and standing charges have risen – but you’ll also need to factor in any exit fees.
Since July 1, customers on the SVT tariff, which is protected by Ofgem’s price cap, pay the following typical rates:
- 7.51p per kilowatt hour (p/kWh) for gas
- 30.11p/kWh for electricity
- A standing charge of 29.11p per day for gas
- A standing charge of 52.97p per day for electricity
It means that a household with typical usage can expect to pay £2,073.98 a year.
If your rates and/or standing charges have risen above this level, it’s worth exiting your current fix.
However, if you need to pay a hefty exit fee, it’s wise to take this number into account when working out any potential savings from ditching your fix.
How do I calculate my bill?
To calculate how much you pay on your current fix, you will need to find out both your unit rate for gas and electricity and the standing charge for each fuel type.
The unit rate will usually be shown on your bill in p/kWh.
The standing charge is a daily charge that is paid 365 days of the year – irrespective of whether or not you use any gas or electricity.
You will then need to note down your own annual energy usage from a previous bill.
Once you have these details you can work out your gas and electricity costs separately.
Multiply your usage in kWh by the unit rate cost in p/kWh for the corresponding fuel type – this will give you your usage costs.
You’ll then need to multiply each standing charge by 365 and add this figure to the totals for your usage – this will then give you your annual costs.
Divide this figure by 12 and you’ll be able to work out how much you should expect to pay each month from July 1.
