Martin Lewis has explained whether he thinks it is worth the British waiting until July to focus their energy.
Over the past two years, fixed energy rates have not been competitive, 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 this.
The energy price cap fell by 12.3 per cent to £1,690 per year on April 1 and will fall again from July 1, but there are concerns over whether there will be a rise in energy costs later. Between July 1 and September 30, 2024, the energy price cap is set at £1,568 per year for an average household using electricity and gas and paying by direct debit.
Cornwall Insight has said it expects prices to rise by 12 per cent from October, leading many to consider a fixed energy contract.
In MoneySavingExpert’s Money Tips Email, Martin Lewis and his team have put together a list of the cheapest standalone solutions and Brits can get a deal nine percent lower than the current price cap.
For those who value price certainty, this could be a “strong time for repair.” Ecotricity has a nine per cent price cap reduction, meaning households can save around £329.
Cornwall Insight has said it expects prices to rise 12 percent from October.
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When asked whether it is worth waiting until July, when the price ceiling would have fallen, the money-saving expert explained that this question is often “based on confusion.”
The energy price cap will change in July, but that will only affect a company’s standard variable rate; it does not affect repairs as they are not limited.
He said: “The rate at which you can fix a solution depends on how cheaply retail energy companies can buy energy at the time they offer the solution. We have no idea what that will be in July. It could be cheaper than now, it could be more. expensive – it’s about world markets. The decrease in the price ceiling has virtually no impact; it’s based on past wholesale prices – so it’s completely disconnected.
“As the Price Cap moves, this naturally changes the difference between the price and the cost of a solution (and companies can factor this into the ballpark of their pricing decisions about how cheap they need to be to gain market share).
“Remember that you are committing for a year (or longer) and each Price Cap period is only three months. So the instant price is only a quarter of the decision anyway.
“We therefore try to base our assessment of whether you will save on Cornwall Insight’s forecasts for the coming year. So if you want to correct this, as the difference now looks quite significant, this is a good bet at the moment.”
Even with the Price Cap, the costs people pay vary by region and payment method.
Because there are no changes in fixed costs and the price drop is entirely due to the unit rates, higher users will save relatively more than lower users.
From July, the price ceiling will drop by seven percent, so €100 now will cost €93.
It is predicted that the price ceiling will rise by 12 percent from October, so that £100 would now cost £104.
The MSE team predicts that the price cap will remain the same from January 2025, so that £100 would now cost £104.
The forecast average for the entire next twelve months is two percent higher than now, meaning this could be the perfect time for some to resolve issues.
It means that some people would pay £1,427 for average use over a year if they reduced prices now to £1,756 in October based on current forecasts, and people could make a saving of £329 against the price cap.
The cheapest independent energy solutions, according to MSE:
The cheapest one is Ecotricity Green fix for one year. This has a limited supply as there are only 2,000 switches available. It’s for:
- New and existing customers
- Dual fuel / electricity only / gas only
- Monthly direct debit only
- Need to have/request a smart meter
This deal is on average nine percent lower than the price limit.
Next up Octopus 12 month solution May 24 v3 for new and existing customers with dual-fuel or electricity only
This deal does not require a smart meter and is on average seven percent lower than the price ceiling.
Ovo Energy fixed for 1 year is for:
- New and existing customers
- Double fuel or electricity only
- Monthly direct debit only
- Need to have/request a smart meter
On average this is five percent less.
EDF Essentials 1 year June 25 solution is for:
- New and existing customers
- Double fuel or electricity only
- Monthly direct debit / cash / check or
When paying in advance if someone has a smart meter, this is on average three percent less than the price ceiling.
No solution:
E.on Next Pledge 1 year trackr stands for:
- New and existing customers
- Double fuel or electricity only
- Monthly direct debit only
- Need to have/request a smart meter
This deal follows three percent below the price cap, so if the cap gets cheaper, it will.
It is a reduced Price Cap rate and can be a good option if you are not sure what to do.