Martin Lewis has welcomed Ofgem’s energy price cap reduction – and an “unprecedented” savings for millions of fixed rate customers too
Consumer guru Martin Lewis says households can make 14% saving by shopping around (Image: ITV)
Consumer champion Martin Lewis says there is a “simple” way for millions of households to slash their energy bill.
The Moneysavingexpert.com founder welcomed the fall in Ofgem’s energy price cap, but urged those who are impacted by to still take matters into their own hands.
Responding to the 6.7% average cut from April, he said Ofgem’s quoted £117 saving which this equates to was “rather meaningless” as it referred to a 12 month period whereas the price cap will be updated in three months time.
“The biggest savings will be for higher electricity users,” he added.
Mr Lewis went on: “The price cap is only on firms standard variable tariffs (which over 60% of homes are), the default ones you’re on if you’ve never switched or your fix deal ended and you did nothing. If you’re fixed, or on a special tariff. You’re not on the price cap.”
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But the policy related changes announced in the last Budget means those on fixed deals will also be better off. That’s on top of the savings they are already making because fixed deals are cheaper than standard variable tariffs.
“Most existing fixed deals will also fall on 1 April with the cheapest dropping typically 7% to 9% (usage dependent). This unprecedented move is because the change is due to the policy costs which come off all bills.
“It’s only ‘most’ because some smaller companies were exempt from the ECO scheme so the reduction on their fixes will be smaller (as they weren’t on it so scrapping it doesn’t change anything there).”
Mr Lewis also tackled the question of whether now was the time to switch to a fixed deal.
“That’s by far the simplest way to save,” he advised. “The cheapest fixes currently are 14% less than the current price cap. And as they will drop in April by in many cases more than the price cap that differential will remain.”
As well as fixed rate deals, Mr Lewis also flagged an option that might appeal to lower use customers.
EDF has launched a price cap tracker which matches the price cap rate but has £100 off standing charges for a year.
He also addressed the burning question of what might happen to Ofgem’s price cap for the rest of the year? “As the reduction of policy costs is ongoing, the April Cap is new bench-line,” he said.
“While its still crystal ball gazing the further out you go, most analysts are predicting it will stay within a couple of percent of that level for the rest of the year.”