Martin Lewis issues urgent energy bill update as cost-of-living crisis continues to bite

Martin Lewis has advised people looking for energy price certainty that they may need to act now

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Martin Lewis has stated now may be the time to act for some households as he delivered an update on whether you should fix into a new energy deal.

The money saving expert has been advising most households to remain with their current plan and therefore stick on the energy price cap rate, due to cheap open market deals being rare.

Experts are now forecasting a possible energy price cap rise to £2,800 in October, with a further increase to £2,900 to come in January.

With these figures in mind, Martin said people looking for price certainty may want to commit to a new energy deal, as there are prices in place that are lower than the reported new price cap.

Martin Lewis has issued new advice as a result of a possible energy cap rise.
Martin Lewis has issued new advice as a result of a possible energy cap rise.

Those on a default tariff who pay via direct debit currently pay £1,971 a year under the current price cap, which sets a limit on the rates a supplier can charge for each unit of gas and electricity you use.

Martin explained in his MoneySavingExpert newsletter that if you're looking to fix, you should be looking to a one-year fixed rate tariff that is no more than 35 percent to 40 percent above the current price cap.

He said that his advice factored in four months on the current rate, as well as three at the predicted October rate, three at the estimated January rate and two at the April rate.

Brits have experienced soaring energy prices amid the cost of living crisis.
Brits have experienced soaring energy prices amid the cost of living crisis.

Martin said: "If the predictions are right, on average you'll pay 35 percent more over the next year than you do now.

"Of course, some of this is crystal-ball gazing and averaging, but overall my best guess, as a rule of thumb, is...

"If you're offered a year's fix at no more than 35 percent above your current price-capped tariff, or 40 percent more if you very strongly value budgeting certainty, it's worth considering."

While the cheapest fixed rates tend to exclusively be offered to existing customers only, but Martin has found some offers that fall below his 35 percent to 40 percent mark.

The Money Saving Expert highlighted Ovo Energy with a deal that "just scrapes" into his equation.

They are offering a one-year fix on its BetterSmart plan that is 38 percent more than the current price cap.

Existing customer offers include E.on's (Next) V14 one-year fix that is 30 percent more.

SSE, Ovo Energy and British Gas are also offering one-year tariffs that work out at 32 percent more compared to the current price cap, but these offers are only available for existing customers.

Two-year fixes may be a slightly riskier option, as Martin warns that assessing the value for money is harder due to how it is difficult to tell how energy costs may fluctuate over the longer period.