Martin Lewis has urged UK households to do three things as the energy price cap prepare to surge tomorrow.
Ofgem has confirmed the cost of energy bills will rise by 54% on April 1. The Money Saving Expert branded the increase as “sickening” as the average bill will rise by £693 due to the surging price of wholesale gas.
The consumer champion has been offering advice to energy customers throughout the crisis, but admitted he is “virtually out of tools” as the hikes are set to come into force. However, the finance guru has shared three things people should do ahead of tomorrow’s price hike – as Mirror Online reports.
READ MORE: Martin Lewis begs Dominic Raab to do more to help energy crisis
Do a meter reading today
A piece of advice Martin has urged households to follow is to take a meter reading today (March 31). The finance guru issued the advice on the season finale of ITV’s Money Show Live. He explained that taking a reading on March 31 enables customers to tell their energy provider how much energy they used before the price cap increase came into effect.
He said: “That way you draw a line in the sand that says to your energy firm, I’ve only used this amount at the cheaper rate. Do not estimate my usage, I am locking it down so you cannot charge me any more than the amount I’ve actually used from 1 April onwards.”
Don’t cancel your direct debit
According to Martin, many households are thinking about ditching their direct debits because they want more control over how much they’re paying. However, the finance guru warned that this may end up costing you more. It’s all to do with how the price cap is calculated.
He said: “If you’re on typical usage, the price cap from 1 April – for somebody paying by direct debit – is £1,971 a year. If you want to pay by quarterly bills, and that’s what most people ditching direct debit tell me they’re thinking of doing, then the price cap is £2,100.
“So that means you’re paying over 6% more for the same usage than you do by direct debit, because there is a discount allowed for direct debit.”
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Don’t fix into a deal
Martin Lewis has warned energy bill prices could rise to £2,900 a year if prices continue to surge at the current rate. Russia’s invasion of Ukraine prompted the price of wholesale gas to soar to record highs this month – and Martin warned bills could surge again in October.
This marks an increase of around 25% – and if the price cap does rise to this level, then Martin explained you’d need a fixed deal that is no more than around 18% to 20% above the April price cap for it to be worth fixing right now. Right now, the MSE founder says the cheapest open market deal at the moment is around 40% more than the April price cap – meaning for many homes, the best thing is to stay on the price cap.
He said: “It is not worth fixing. You’re better off to stay on the April price cap and then if nothing changes before that, go on to the new October price cap. Again, this is my best guess, I do not have certainty or surety here – it is a bit of crystal ball gazing.”
Open market deals refer to fixes that are available to new customers. In some rare cases, your current energy provider may offer you something that is below the 18% to 20% threshold that Martin mentioned above. This recently happened with E.on where it offered customers a fixed deal that was the same price as the price cap – but it sold out within hours.
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