Money expert Martin Lewis has weighed in with crucial advice after Ofgem has confirmed that the energy price cap will rise again next year.
From January to March next year, the new price cap will be £1,738 – a 1.2 per cent increase. This marks the second rise in a row, with experts predicting another slight increase in July.
Responding to the announcement, Mr Lewis says bill payers can do a “simple thing” to avoid paying more over the next year: switching to a fixed tariff deal.
His Money Saving Expert service recommends several providers which are offering the best value standalone energy fixes for 12 months.
The cheapest is Outfox the Market, which works out at 6.5 per cent less than the current price cap on average. E.on’s Next tariff works out at 5.6 per cent less, and smaller provider So Energy has a fix at 4.1 per cent less.
Mr Lewis also says consumers could consider a tracker tariff. These follow a price index directly, such as wholesale energy costs, but they all work a bit differently.
E.on offers a tracker tariff where the unit rates are discounted, so better for higher users. Meanwhile, EDF’s tracker discounts the standing charges, which would benefit lower energy users more.
Octopus’ tracker tariff changes rates based on daily energy costs. This has been around31 percent cheaper than the Price Cap on average over the last year – but prices can rise if wholesale energy costs do.
Money Saving Expert offers a bespoke deal finding service on through its Cheap Energy Club.
Mr Lewis also reaffirmed his calls for standing energy charges to be cut, saying that he is “cautiously optimistic” about an ongoing Ofgem consultation on the controversial fee.
A standing charge is a fixed daily sum that is added to customers energy bills regardless of how much energy they use. It is used to cover costs like maintaining the supply network, meter reading visits, and government support schemes.
“This £300+/year energy poll tax is a moral hazard as it disincentives lower users to reduce use,” says Mr Lewis.
“It also means many elderly people who have gas only for winter heating pay every day in summer when they don’t use it.”
The money expert adds that he is meeting energy secretary Ed Miliband soon to discuss the issue.