Martin Lewis, founder of MoneySavingExpert.com, has urged those households still on a standard variable energy tariff to switch to a fixed tariff as soon as possible. It comes after energy regulator Ofgem said on Tuesday that the energy bills of millions of households are to rise by 6.4% from April 1 when it increases its price cap for a third consecutive quarter.
The regulator said the increase, which will raise the average bill for households in England, Scotland and Wales on a standard variable tariff from the current £1,738 a year to £1,849, followed a recent spike in wholesale prices. The rise will equate to £111 for an average household per year, or around £9.25 a month, over the three-month period of the price cap. This is 9.4% or £159 higher than this time last year but £531 or 22% lower than at the height of the energy crisis at the start of 2023.
Speaking on BBC Radio 4’s Today Programme, Mr Lewis said the cheapest fixed deals currently available were around 4% cheaper than the current price cap, which would increase to around 10% less once Ofgem’s latest increase takes effect from April 1.
He said: “Based on the predictions at the moment, once it goes up in April it isn’t coming back down to these levels for the next year. So as you can fix currently at cheaper than the current cap, never mind before it goes up, it is a no-brainer to fix.”
Mr Lewis suggested consumers wait until around lunchtime on Tuesday to check for deals and to make sure to use comparison sites that take in the whole market by default rather than cutting out some suppliers who do not pay to be listed, as he understood some cost-effective deals were due to be launched this morning.
He said: “And remember that when you do a comparison, remember that the savings you’re given on the cheapest fix are compared to the current price cap. So they won’t look big, they might say £30, £40 a year. But remember it’s going up by 6% so if you do nothing your price would rise whereas if you fix your price would drop.”
Ofgem chief executive Jonathan Brearley said: “We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households. But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.
“Energy debts that began during the energy crisis have reached record levels and without intervention will continue to grow. This puts families under huge stress and increases costs for all customers. We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward.”