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Money expert Martin Lewis is urging customers of major energy firms including British Gas, EON, EDF and OVO and every other major supplier to take action before next Tuesday.
The money maestro was on Good Morning Britain on ITV1 today, where he explained how energy customers can beat the looming price cap, which is set to increase by 10 percent for gas and electricity on Tuesday, October 1.
Martin said that it’s an unusual time for the energy market, because Ofgem is putting the price cap up by 10 percent in October but wholesale rates now are starting to come down, meaning energy firms are offering cheap fixes just as the price cap is going up.
Martin Lewis said: “There is a way to beat the rise but in order to do that you need to understand what’s happening.
“Now unless you already know you’re on a fix you’re almost certainly on a standard tariff.
“It’s well over 80 percent of homes so it’s almost certainly the majority of people watching will be on one of those tariffs.
“Next week on October 1 we are going to see the price cap rise again by 10 percent.
“Now the chart is based on the Ofgem typical use figure. That’s meaningless, nobody is on typical use, it’s far better to look at the percentage.
“So what does that mean in practice? Well for every £100 you pay on energy right now, from next Tuesday you are going to pay £110 for the same usage. That is what a 10 percent rise means.
“But the price cap only lasts three months.
“So that takes you up to January 1. What’s gonna happen then? About a month ago I was saying it’s likely to go up again then.
“Wholesale prices have come down, the prices gas and electricity providers pay have come down over recent weeks, so the current prediction is it’s going to come down 2 percent in January and another 1 percent at the end of March.
“But even once we go through those two drops you’re still paying substantially more once we get to next May than you are currently.
“So the price is gonna rise and stay above where it is right now for the foreseeable future.
“You are paying, if predictions are right, about 8 percent more than you are paying right now if you do nothing and stick on the Price Cap.
“Which is why I would suggest to you, you need to do something.”
Martin explained that because wholesale energy prices are going down, and the price cap is based on wholesale rates from six months ago, ‘bizarrely’, the price cap is going up just as fixed rate deals are coming down in price.
Martin added: “Outfox The Market is the cheapest fix right now. It is 9.4 percent cheaper than the October price cap on average and 0.8 percent cheaper than what you pay.
“So it drops a tiny bit now but from next Tuesday you save a lot.
“EDF has a tariff which says you can fix now at the current rate. So you simply just don’t get that price rise.
“That’s it you just stop the price rise.
“I would say for the vast majority of people who are risk averse and don’t want to see prices going up, fixing now is the safe option.
“But those questions say ‘my company has offered me should i fix? This is not about getting a fix, this is about getting a cheap fix. If you’re gonna lock in a price, you want to lock in the cheapest you can get.”