Martin Lewis has revealed the 11 tricks that could save you £100s on your energy bills.
The cheapest deals cost 40 per cent more than a year ago and are still rising, and failure to act will leave you facing a large bill.
Martin Lewis and his team at MoneySavingExpert have looked at everything you need to know to save on your bills.
This is what you need to know.
Rates have shot up over the last 16 months, from the cheapest to the most expensive
Wholesale energy prices, the cost that firms pay, were at record lows last year as demand plummeted due to lockdown.
Since then the cost has shot up, with gas prices at 15-year highs.
Mr Lewis said: “As a result, cheap deals have disappeared... last year the cheapest fixes for those with typical use were in the £700s, now few are below £1,200/yr.”
The price cap will rise by £140 per year on October 1, and will likely rise again.
On October 1, the cap will rise by an average of 12 per cent for those on billed meters and 13 per cent for those on prepay meters.
But what does that mean?
The MoneySavingExpert explained: “To put that in context, for someone on typical use today the cap is £1,138 per year. From October 1, it will be £1,277 per year. So £100 a month will be less than the average.
“The cap lasts six months. It'll change again in April. It's set based on wholesale prices over an assessment period. That's already started for April, and so far it looks like it'll rise again.”
Lock into a cheap fix now
Are you with British Gas, E.on, EDF, Scottish Power or SSE on a standard tariff? Locking into a cheap fix now can protect against the likely future hike.
Mr Lewis said: “If you do a cheap 1 year fixed comparison and you can lock in at a cheaper rate for a year, it's worth doing even if the saving is only a few quid, as the likelihood is over the next year the price cap will rise, so your real savings will be bigger.
“In the hoped for, but unlikely event that prices drop rapidly, you can always just leave the fix, even if you need to pay a small early-exit penalty. Yet my bet is locking in now will be a winner.”
Traditionally cheap options set to jump again
Igloo and Bulb, two traditionally cheap, good-service frims both offer a single variable tariff and have just announced their third price hike of the year on October 1.
In total it pushes their prices up by £300 per year for someone on typical usage.
As it takes a few weeks for a switch to complete, do it now and you should make it just in time before the rates rise, Martin Lewis advises.
Don’t be afraid to switch
Mr Lewis said: “My email bag is swamped with people angry and horrified as their cheap fixes set up a year ago are ending, and they're being asked to pay many £100s per year more.
“I'm afraid right now I've no answer to that apart from... accept it... or write to your MP. Mentally though, let go of the price you were paying. The market's cheapest fixes are a staggering 44% more expensive than this time last year - and are likely to continue to rise.
“And while the cheapest variables undercut it, it's possible some are only cheap as they are about to imminently announce another hike.
“The idea of 'saving' compared to what you were paying has gone for now. Yet that's not a reason to do nothing, you still need to 'save' compared to what you will pay if you don't act, as what you pay will very likely jump to the price cap if not. So get on it.”
Stick with a cheap tariff
If you’re on a cheap fix or cheap variable tariff with a few months left, Mr Lewis recommends sticking with it rather than switching.
He said: “Prices have risen so much that the savings you'll make by sticking with your old cheap tariff, while it lasts, will be huge (though do compare to check).
“So even though prices are rising, and waiting may mean the deal you get in future may cost even more, I suspect the gain of holding on to very cheap tariffs now will likely outweigh that.”
Beware of comparison sites
Most comparison sites will hide deals that don’t pay them, and most cheap deals don’t pay them right now.
Martin Lewis explained: “Right now, in these extraordinary times, many of the cheapest firms have pulled payments. That means most sites, by default, hide a wide range of cheap tariffs.”
He recommends using his Cheap Energy Club comparison, which does not filter out cheap deals.
Be wary of small firms going bust
Mr Lewis said: “Small new firms, with less capital behind them, are more likely to be at risk in the turbulent market, as high and rising wholesale prices can seriously squeeze providers' profits.
“As some firms moot they aren't making money, even at the price cap, then it's possible cheap rates are more about winning over new customers, which can be a sign of ambition or desperation - it's tough to tell.
“If you do go for a firm that later goes bust, don't worry - your gas and electricity stays on and any credit is protected under Ofgem's safety net rules.”
Not all fixes are cheap
Make sure to check your “cheap” fixes on comparison websites Martin Lewis warns.
Some fixes are higher than the new price cap, Scottish Power for example has one lasting over a year which is 20 per cent higher than the new price cap, meaning costs would need to rise by 50 per cent before April for it to be worth doing.
Help is available if you are struggling to pay bills
Martin Lewis said: “Emergency measures put in place due to coronavirus are still ongoing. Your supply won't be cut off - standard credit meter disconnections have been suspended, while prepayment customers can get emergency credit to ensure the lights stay on.
“There are also a range of options suppliers can offer, including payment plan reviews, payment breaks or reductions. This is all done case-by-case, so contact your supplier as soon as you can if you do start to struggle and let it know if you're vulnerable.”
Use less, pay less
The MoneySavingExpert said: “Most people (including me sometimes) do waste energy. We know wearing jumpers, lowering thermostats and not leaving electricals on standby will help. And maybe these price hikes may change behaviour.”
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