Martin Lewis shares ‘magic number’ predicting when to fix your energy bills to save | Personal Finance | Finance
As the cost of living continues to rise, the money saving expert gave his advice about price caps and energy tariffs in his latest video update. He explained whether or not people should now fix their energy tariff or stick to the variable price cap tariff.
On April 1, the price cap increased 51 percent which left households paying hundreds more each year.
This price cap is set to rise again in October which will see another increase in monthly bills.
In a video posted online the financial journalist said “timing is crucial” as things change regularly.
Mr Lewis added: “The current price cap for someone who is dual-fuel, which is typical use, is £1,971 a year.
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“That went up massively on April 1 and that’s where it sits right now. That will last until the beginning of October.”
Ofgem reviews the cap twice a year, with changes implemented on April 1 and October 1.
According to latest figures released by analysts at Cornwall Insight, the cap is predicted to increase by 32 percent in October 2022.
The estimated price cap will go up to £2,600 in October 2022 for the average dual fuel bill.
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This is a predicted increase of over £600 from the current cap of £1,971, and would mean that energy prices would have doubled in just one year.
The exact amount one pays depends on their energy usage.
Cornwall Insight originally estimated a 50 percent rise in October, and was then re-estimated at 29 percent in late March 2022.
Although the 32 percent increase is lower than its original estimated figure of 50 percent, it will still add significant costs to one’s gas and electricity bills.
“Having said that, I think a fix does have the merit of price certainty, it’s effectively a cap in its own right but the cap lasts longer.”
Cornwall Insight suggests we’ll see a 12 percent drop from the October price cap in April next year.
Mr Lewis, who founded MoneySavingExpert.com, said: “I’d suggest as a rough rule of thumb although the maths shows 17 percent, if you can find a fix at no more than 25 percent higher than the current price cap rate and you value price certainty it is probably worth fixing at that rate.
“Let’s look at what is out there at the moment, the fixes which are worth it are probably short-term fixes with your current supplier that is cheaper than open market switches.
“The problem is they aren’t published at an open market rate. I can’t see them. The cheapest I can find today is 35 percent – so it’s probably not worth it.
“That’s why I think 25 percent is the magic number.”
