Martin Lewis has advised consumers to switch to or stick with variable tariffs that are subject to a price cap instead of signing up to fixed-price deals.
The price cap is set to rise to £1971 a year from Friday, April 1. But that does not mean £1971 is the maximum customers will pay, as Martin explained when a Good Morning Britain viewer asked if it would be if they signed up to a variable default energy tariff.
"That is not correct," said the Money Saving Expert founder.
Read more: Martin Lewis on why you shouldn't switch to a fixed price tariff
"The £1971 a year, which is quoted as new price cap from April 1, is just an estimate of what somebody on typical use would pay. There is no actual price cap. It's actually a cap on unit rates and standard charges you pay for energy, which means if you use more, you pay more. If you use less, you pay less."
Martin also cleared up who is on a price cap deal.
"You're on the price cap if you've never switched, or if you had a fixed [price energy deal] which ended, and you did nothing. You're on the price cap if your firm went bus and you were automatically ported to a new tarrif. And that means the vast majority in England, Scotland and Wales are on the price cap right now, but it does not cap the amount you're going to pay."
The price cap is set to rise again in October. It is calculated based on prices between February and July. Martin estimates it will rise to around £2,500, as he advised customers not to sign up for fixed deals unless they can find one that is no more than 20% higher than the price cap deal.
"The cheapest fix at the moment is around £2,800, which is more than the predicted October price cap. So, it isn't worth getting a fix, today, it's just not worth it. Sit on the price cap. What you want to watch for is does your firm ever offer you a much cheaper fixed deal? If it was to offer you a fix at no more than 20% higher than April price cap, then I would consider fixing the price, but I can't promise it will work."
