Martin Lewis has warned households may have seen a substantial increase to their energy bills.
On The Martin Lewis Podcast podcast yesterday, he explained that some people may have seen their energy bills skyrocket since the new energy price cap came in on July 1.
He said: “I have a warning for anybody who is on a fixed rate energy tariff. You need to check now if your price has just rocketed.
“That’s because on Saturday, those who locked into costly fixes – usually about a year ago – would have lost the Government’s energy price guarantee subsidy.”
The money saving expert explained the Government subsidy was a reduced rate given to people who remained on the price cap.
The Government brought in this subsidised rate and gave it to people on expensive fixes too.
However, because the price cap has now dropped, the Government has removed the subsidy, meaning that some people on expensive fixed rates will see their “rate increase quite substantially” as it adjusts back to the contractually agreed rate before the subsidy was introduced, Mr Lewis stated.
He continued: “There’s possibly over a million people in this situation. If you see rates jump, then it’s likely you would be better off moving to the normal price cap tariff but you should factor in any early exit fees.
“In some cases, once you move to the price cap, you may want to see if you can get a cheaper fix available now.
“So, check if your fixed rates have changed. If so, and it’s materially higher than the cap rates you should consider ditching the fix and moving to your provider’s price cap.”
Households affected are customers of a range of firms such as Scottish Power, EDF, Octopus Energy, British Gas, Utility Warehouse, SSE and So Energy.
Individuals on these fixed rates are urged to check the exit fee if they want to leave their deal early. These exit fees can range from £50 to £400.
A spokesperson for the End Fuel Poverty Coalition said: “This news will send shockwaves through hundreds of thousands of households who thought they were doing the right thing by fixing their energy tariffs.
“It turns out they’ve been taken for a ride by energy firms who may now be charging them more for their energy than people on the Ofgem-fixed standard variable tariff. Energy firms must work immediately to end this discrepancy and bring all tariffs into line with the Ofgem price cap or waive exit fees for these customers.”
Since July 1, customers on the Standard Variable Tariff, which is protected by Ofgem’s price cap, pay the following typical rates:
- 7.51p per kilowatt hour (p/kWh) for gas
- 30.11p/kWh for electricity
- A standing charge of 29.11p per day for gas
- A standing charge of 52.97p per day for electricity
It means that a household with typical usage can expect to pay £2,073.98 a year.
If one’s rates and/or standing charges have risen above this level, it could be worth considering cheaper options.
Episodes of The Martin Lewis Podcast is available on BBC Sounds.
