With energy bills set to rise again in January, Martin Lewis explained the “one deal” on the market that’s offering a “good” rate.
Ofgem has announced that it will be increasing the energy price cap by five percent in its next quarterly adjustment, adding around £94 to average bills over the course of the year.
Speaking on this morning’s programme, Good Morning Britain host Susanna Reid asked: “Looking around, are other providers getting more competitive?”
Shaking his head, the Money Saving Expert founder said: “I was quite surprised that in the statement from Ofgem, he said we’re starting to see the start of competitively switching, and that there are cheaper fixes and cheaper deals out there.
“Well, saying ‘competition has started’ is like watching Usain Bolt run the 100 meters by himself and saying ‘Look, we’ve got competition again’.
“I have checked this morning. There is one deal that I would suggest people switch to. That is for existing customers of E.ON Next. It has a tariff that locks in at three percent under the price cap for the next year. So, you’ll pay less than the price cap.
“If you are an E.ON Next customer, I would suggest that you switch to that because that is a good deal compared to what you are paying.
For those who aren’t E.ON Next customers, Mr Lewis said: “You could switch to E.ON Next’s standard rate and then switch again to this rate, assuming it’s still there by the time you move.”
As for cheap fixes on the market, Mr Lewis said: “There are no cheap fixes available that I would consider that do not involve you having to switch all of your other utility bills as well right now.
“The cheapest fix out there, across the market, is four percent more than the current price cap and on my numbers based on the current predictions, you wouldn’t want to be locking in on more than one percent than the current price cap.”
Providing context on the situation, Mr Lewis said in January, homes will pay more for energy than they have ever paid before in any winter.
He explained: “The reason for that is quite simple. While the cost of energy is cheaper now than it was last January, last October the Government stepped in and provided support of £66 to £67 per household each month during the winter period.
“This year, they’re not doing that. So when you look at the amount the rate has dropped but you factor in that we haven’t got that support – if you add it all in, depending on if you adjust seasonally, a typical household will either be paying £30 a month more or £45 a month more than they did last winter. This is not good news.
Referring to the unexpected decline in October’s inflation to 4.7 percent, Mr Lewis explained that the drop was attributed to a decrease in energy bills.
However, he noted: “But energy bills hadn’t dropped in practice for the amount people pay because last October, people were getting £66 support from the Government. As that’s factored as an income payment, that’s not included in the inflation figure, so that is a false inflation figure in practical terms.
“Because all of that drop was not one that people actually felt because they were paying less last year.”
Per unit rate, the price for a typical user paying by direct debit will rise from 27.35p per kWh to 29p per kWh for electricity on January 1, 2024.
For gas, the price will rise to 7p per kWh. The average daily standing charge will remain unchanged at 53p per day for electricity and 30p per day for gas.
Mr Lewis said: “Those who will be hardest hit will be those homes that use gas and have high usage. Lower-usage homes and electricity-usage homes will not see the same scale of rise.
“My big warning now over the next few months is to keep an eye on your direct debit. Energy firms will start to put them up relatively soon – and make sure you go online and do a direct debit check.
“See if the direct debit you are being given by the energy firm is correct. If you are heavily in credit and they’re asking you to pay too much then under the energy firm’s terms and conditions licence agreement, you have a right to ask for a lower direct debit.”
Good Morning Britain airs on ITV on weekdays from 6am to 9am.
