Money saving expert Martin Lewis is ‘strongly’ advising customers of major energy suppliers to get a ‘cheap fix’ now to slash £152 off energy bills for the next year.
On Friday energy regulator Ofgem is set to announce its energy price cap tariffs for the months of July to August.
Currently, the typical household pays £1,690 but a reduction expected to be announced this week will slash about 7 percent from that total.
However, the issue is that energy bills are expected to rise again from September 1 and again in January, so the best course of action right now is ‘probably’ to fix your energy.
After years of price rises and energy bills hitting the price cap, it’s the first time cheaper energy fixes have been a viable option.
And while energy will probably never be as cheap as it was three years ago, you can still, in all likelihood, save money against the price cap over the next 12 months by fixing.
Martin explained on his latest podcast for BBC sounds: “Cornwall Insight have now done the numbers and they are predicting that the price cap on the 1st of July will drop by an average of 7 percent.
“That means it’s likely to drop between 5.5 percent and 8 percent because there are some other factors in there, but it is very very strongly likely we will see a drop coming in July.
“That’s the good news. The less good news is that the current prediction for October and January are rises.
“October it’s predicted to rise just below 4 percent. January by one percent.
“We might see the last drop coming at July for now and increases afterwards.
“Still, to be fair, when you go down 7 percent and add 4 percent on top you’re still less than where you are right now.”
Martin added, though, that this is important because fixed rate deals are starting to come back.
Martin said: “If you look over the next year at the predicted price cap, and the price cap is what sets the rate for 90 percent of homes because 90 percent of people are on a standard tariff. You would look and say on average you will pay roughly 3 percent less than you do right now.
“Whereas the cheapest fix available right now is 9 percent cheaper.
“So stay on the price cap and you pay 3 percent less right now but go on the cheapest fix on the market, if you’re on direct debit, is 9 percent cheaper.
“So you can lock in right now and the probability if the prediction is correct is it will be cheaper than the price cap.
“So it looks like people should be getting a cheap fix right now. We are moving back into that fixing territory right now.”
If you were to fix on a deal which saves 9 percent against the current price cap of £1,690, that would be a £152 saving.
But Martin added: “Caveats: energy prices are worldwide and they change and there is no certainty here, but I would say strongly on the balance of probability right now if you were to get a cheap fix it looks like you will save money over the next year and you will at least have peace of mind when you do that, so we are at least in that environment.”
