Martin Lewis has issued advice to people who want to get out of fixed energy tariffs. The personal finance expert told ITV viewers on This Morning that it’s something everybody needs to know.
He even said: “Note this down, everyone.” It was all about a special rule that comes into effect with 50 days to go before the fix ends.
The MoneySavingExpert website founder, who was speaking to hosts Cat Deeley and Ben Shephard, spoke about the issue after a question from Mandy, a single widowed mum on Universal Credit.
She said: “I am currently locked into the lowest British Gas tariff until the 26th of May, but I am not sure why that’s the date because I locked in last April.
“I can’t seem to change until the 26th without breaking the contract and incurring a £75 fee.
“What is my best option? I use very little energy as I am a single widowed parent of two young children. I am also in receipt of Universal Credit.”
Martin gave an extensive reply in which he touched on a number of issues. These included her current deal, the rules over fixed tariffs, the energy price cap now and in the future – and even the Ukraine war.
Firstly, he said that Mandy should stay with her deal as prices have risen since she secured it. He said: “Well, if you fixed just over a year ago, you are probably on a cheap rate right now so you don’t want to do very much.
“You ask why the fix is… most fixes with British Gas… tends not to do a year, it tends to have a fix available that is available to a set date. That is normally a year-ish, so sometimes it’s 13 months, sometimes its 13 and a half, depending on when you get it before it launches a new one.”
Then he turned to his message that he wanted everyone to take note of. He said: “Now the first thing everybody needs to know, so note this down everyone, if you are on a fix, within the last 50 days of your fix – so that literally means day 49 , day 48, 47, 46 – you are free to move and they cannot charge you early exit penalty.
“Early exit penalties cannot be charged in the last 50 days of your fix. So it isnt quite a case of you have to wait until the 26th of May.
“You have to wait until, if you don’t wanna pay an early exit penalty, you can wait to 49 days before the 26th of May, which is probably, what, the beginning of April. Having said that, I would suspect that you are on the cheapest fix at the moment.”
He now moved the conversation on to the energy price cap, which is rising next month. He said: “We talked last week about [how] the energy price cap is going up 6.4% on the 1st of April.
“Many people think that fixed rates go up as well. They don’t.
“Just [to] be slightly complicated… The energy price cap is set on past wholesale rates.
“The April energy price cap is set on wholesale rates between the middle of November and the middle of February. They went up so it’s gone up.
“What the rate you can fix at is based on the rate that energy providers can currently buy in energy for the next year. Now that does’ t move in sync with the price cap.
“I can’t tell you what the situation may be in May. Look, yo know, if there is peace in Ukraine and Russian gas supplies are turned back on, energy prices will be a lot lower then.
“You will be able to fix at a much lower price than it is now. If the opposite and it looks like we are going to continue to be entrenched in that Ukraine situation, then energy prices – or Russian supply isn’t back on – energy prices will be higher.
“So I cant tell you what the situation will be in May because it’s simply an unknowable. But I can say the likelihood is, right now, I would suspect your fix is very cheap so you probably want to keep it running as long as you possibly can.”