The martin lewis money show live is back on itv at 8 30. This thursday, where i’ll. Take you through it step by step, but this is your heads up what you need to know for now, you’ll, have seen in the news that energy bills have risen enormously, uh um to an unprecedented level, and we’ve.
Never seen anything like what’s happening right now. It is an absolute coincidence of loads of negative factors that are bringing together the wholesale prices. Those energy firms pay have gone up four times on gas compared to nearly 20 months ago, and that’s going to feed into domestic prices.
So this isn’t a video i’m afraid about cutting your bills and making them lower. This is about damage limitation. How do you stop a huge increase to put it in perspective? The cheapest tariffs available today are 40 percent.
More than the cheapest tariffs available a year ago, so anybody coming off a cheap, fixed deal. You are going to pay very, very substantially more than you were before, and it’s about choosing what you do at that point.
The other big price you need to know about is the price cap. This is the default rate. If you like, the maximum the big providers on their standard rates, those that you’re on, if you never switch or those that you go to once your cheap fix, has ended the maximum they’re allowed to charge.
Now, on the first of October, that is going to increase by 12 percent to 277 pounds, while it’s called a price gap. It’s, not a price gap that isn’t the maximum. You can pay it’s. Actually, a cap on rates.
The 1277 pounds is what someone with typical usage would pay. If you use more, your price gap is higher. If you use less, your price cap is lower. Now what you have to understand about the price cap is, it is based on wholesale prices in the six months up to the beginning of august, so prices were rising at that point, but nowhere near as extreme as they are right now.
So all we’ve got factored into that price cap is the early part of the price rise, and that is pushing it up. Twelve percent at the current run rate when it moves again on the first of April next year.
You would expect to see the price cap for someone on typical use jump from the 1277 pounds. It’ll, be from October to around 1500 pounds a year or more, that’s. The scale of rise that we’re, seeing now that time lag the fact that they’re.
Looking at past prices to set the current one is going to be hugely positive right now because it locks you in at a price, far lower than the cost price for energy firms, which is why so many are going bust.
But it’s. Going to be really negative in the future, if prices do drop again and then next April you’re going to be the maximum price is going to be much much higher than you’re, going to be able to get on the Cheapest deals on the market, and that is what you have to factor into your logic.
So here’s, the choice you could – and i never thought i would say these words – you could simply stick with the price cap. The standard variable price that your company is going to charge you when you come off a deal or that you’re on right now, because there are very, very few tariffs that are cheaper than that.
So, for the first of October, on typical use 1 277 pounds and in effect you’ve – got to fix for six months that it won’t rise in that six months period. So you could go onto that and cross your finger.
Fingers that, in the meantime, things will get cheaper before we get to next April, and then you do a move afterwards and that is for once a legitimate choice. Your other alternative and you’ve, got to go quick on this because i’m.
Not even sure these tariffs will last out the day. Is you lock yourself into the cheapest one or two year fix that you can get right now, and there are a couple of deals out there right now, where you can fix for a year or two at slightly lower than where the price cap will jump to On the first of October, still have in today’s, price cap, but lower than the first of October’s price cap, and you can look in for a year, which means if things do continue to rise.
And we see next April. A huge rise in the price cap – you’ve, locked in at a cheaper rate, but, as i say, those deals are not likely to last for long. If you’re locking in on that, there will be a small exit penalty to pay.
If you change your mind and leave later, but frankly compared to the size of the rise at the moment that’s, it’s. Just diddly squat it’s, neither hither or diva a big problem with this is comparison sites, most of them most comparison.
Sites have always for the past few years only shown you tariffs, they have a commercial relationship with by default. You can select to see all tariffs, but by default you won’t. They’re allowed to do that.
That’s. What the regulations say that they can do now right now, most energy firms have stopped paying comparison sites. So if you go and look at the comparison, pretty much every cheat deal out, there is not paying and some comparison sites have even said.
We’re closing down. We’re, not allowing you to do a comparison right now, so you have to be looking whole at market. Now, when i say most, i mean virtually all your use, which is your money, supermarkets, all of them.
Their standard policy is to only show tariffs that pay them by default. They may be turning that off at the moment, because we’re in an unprecedented situation, but last time i checked, that was the score.
I should of course point out that my comparisons like money, saving experts, cheap energy club, has always shown you whole of market by default. So you’ll, get all tariffs on there. It doesn’t doesn’t filter by commercial relationship in that way.
So you can just look at that. You can see all tariffs, but it’s very important. You do that right now, because all the fixes that are cheaper than uh the price cap come the first of October. None of those are paying comparison sites.
As far as i’m aware, i’d, have to double check that this is an emergency video. I haven’t, dotted my eyes and crossed my teeth. First, i’ve just tried to get it out there as quickly as possible, but i’m, pretty sure that’s, the scenario final couple of points look: we are going to see people this winter, choosing between heating and Eating i mean we already have.
The universal cap disappear, universal credit extra 20 pound uplift disappearing. We have furlough disappearing, the self-employment grants are ending, inflation is at a high. This is a terrible time for people’s finances, and now we have this energy price rise.
There is help out there look at the warm home discount, though it is telling that the warm home discount has been stuck at 140 pounds for the 140 pounds. It’s, a lump sum that you get if you’re on low incomes, it’s, been at that for nine years, and just in the last year alone, the cheapest deals have gone up by 40 percent.
So i mean it has certainly not kept pace with the price of energy. You can also talk to your energy company and should talk to your energy company. If you’re going to struggle to pay your bill, they may have funds and be able to help you to an extent, though, obviously with these extreme prices and the fact that they’re locked in as a price cap.
That’s effectively below cost for most companies. They’re, going to be having a tough time, and then we’ll, see how generous they’re, going to be to be able to help um customers, which is why the government is talking about intervening to help energy Providers take on all those smaller firms that are going to go bust and more will go bust um.
I think it also needs to be looking at helping consumers anyway. This was meant to be a quick brief video to help you, as i say, much more details. Coming in the weekly email from moneysavingexpert.com – and i will go step by step in my special in the first martin lewis – money show live on itv at 8 30.
The series starts this Thursday night. I hope this helps someone brought to you by androidstream