Money expert Martin Lewis flagged an ‘unprecedented change’ (Image: ITVX)
Money expert Martin Lewis has flagged an ‘unprecedented’ change for energy bills from next month but also issued a warning for gas and electricity customers to act now.
Speaking on The Martin Lewis Money Show Live on Tuesday, March 3, Martin explained that bills are set to be cut from April thanks to government policy changes which will see charges to fund energy schemes removed from bills.
In an unprecedented step, even those who are on fixed deals when April rolls around will still be handed money off their bills, mid-fix, Martin explained.
He told his ITV1 viewers: “Normally I’d say once it’s fixed it never moves but something perverse and good and unprecedented is coming on April 1 which I talked about last week. If you are on an existing fixed rate on April 1, policy changes, the underlying policy cost to bills are being moved, some onto general taxation, some are being cut, and that means the unit rate of electricity and the unit rate of gas, even on fixed tariffs, will be reduced on April 1 and that is locked in.
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“It means an unprecedented 7-9% typical fall on existing fixes on April 1, you understand what I’m saying, not new fixes existing ones, I know some people got confused about that last week when we did a full energy show.”
But the bad news is that energy prices are set to rise significantly from July thanks to the ongoing war in Iran. And it’s already affecting prices on fixed tariffs, the cheapest of which are being pulled by suppliers this week.
Martin added: “On the price cap, which is 60% of homes in England, Scotland and Wales, if you’re on your standard variable tariff from your provider, you haven’t fixed, you’re not on a special deal, your fix ended and you came off it, you’re on a price cap tariff. Well the impact of the spike on the price cap will only be from July.
“The April price cap fall is locked in, it won’t change. The July cap is based on an assessment over three months and the average prices over three months. So the spike will, of course, push that average up, but what really matters here, is how big will the spike be and how prolonged will the spike be?”
Analysts Cornwall Insight said forecasts for Ofgem’s price cap for July to September had surged to £1,801 a year for a typical dual fuel household – an increase of £160 or 10% on April’s cap announced last week.
Following changes to wholesale rates, energy providers have already begun pulling their cheapest fixes.
That’s why Martin Lewis urged people to get a fix now if they are still on the price cap.
He posted on Twitter on Tuesday: “Important: If you can get off the Energy Price Cap right now, you should & urgently!
“The wholesale gas rate is spiking due to the Iran conflict, and it is a prime driver of UK elec prices. If that’s sustained (big if), it will likely push the Price Cap rate up from July
“Some of the cheap fixes from before the weekend haven’t (yet) been pulled, so you can still lock in a rate at around 14% less than the current Price Cap, both saving you money and giving peace of mind that the rate can’t rise. You can do a whole-of-market comparison via http://cheapenergyclub.com.
“However, many firms are reassessing their fix prices today and may reprice their deals upward. There’s a risk many of the current cheapest fixes will be gone by this time tomorrow.”
