Top financial guru Martin Lewis has announced which customers on fixed energy tariffs will get their bills reduced.
The Money Saving Expert has noted how the government's new energy plan will affect those in a fixed energy tariff, including those who tried to get ahead of the curve. As reported by Yorkshire Live, bills are set to rise in October from an average of £1,971 per household to a whopping £2,500, thanks to the price cap freeze.
However, a £400 energy bill rebate issued by the UK Government will bring the total cost down to £2,100 on average. Yet, this freeze and rebate is for those on variable energy rates, and not those who are on fixed rates or whose fix is about to expire.
READ MORE - The full list of DWP and HMRC benefits to be paid early due to Queen's funeral
So, how will those on fixed rate tariffs benefit from the price cap freeze? Read on below for more information.
Will I benefit from the price cap freeze on a fixed rate tariff?
Short answer, yes - probably. Martin Lewis has explained how those on a fixed tariff will see their bills reduced under the plan, and it will be brought down per unit rate instead. The only people who won't see much if any benefit are people who fixed over a year ago on a deal better than what they'd be on in the recent price rise.
If you currently pay less than the new guaranteed minimum, your bills won't be reduced. The money guru continued: "You will be aware that most people have been on a price cap tariff, and it was every 6 months, it’s now every 3 months. It was announced that the rate was due to go up a horrendous 80% and it was due to go up again in January.
“Well that has gone. Instead, a price guarantee has been introduced. It is just a capped tariff by another name, but crucially, the guarantee lasts for two years, so we know what the cap will be for two years, and it’s not going up by as much. Compared to the current rate it’s going to increase by 27 percent.
“Now it’s important to remember that there is no cap on the price you can pay for energy. What the price cap actually is, it caps the standing charge and it caps the unit rate, how much you pay for each unit you use, so you use more, you pay more, there’s no total cap, it’s a cap on the unit rate.
“For people with typical use the price is going up from £1,971 a year to £2,500 a year from October, a 27 percent rise.
“However there is also a flat £400 for every household including for those of you on fixes, to reduce the average to about £2,100 on typical use and it will reduce your fix too."
Martin also explained what will happen to customers who are currently on fixed energy deals. He said: "The government has said those people on fixed tariffs will get the same per unit energy reduction that people on the price guarantee get, compared to what they were going to pay in October compared to what they are going to pay in October.
“In practical terms that means a reduction of 4p per kwh on your gas rate and 17p pkwh on your electricity rate.
“There are two ‘buts’ here’. If your fix is cheaper than the new guarantee rate, then it won’t be reduced.
“Next, if your fix is above the new price guarantee rate but the full reduction would take it below, you only get reduced to the same as the price guarantee rate.
“Now that last bit was not on the UK.gov website. I’ve now had it confirmed by the Department for Energy. The maximum discount you’ll get is get it down to the new price guarantee rate.”
Martin concluded by saying: "If you fixed 3-9 months ago, at a relatively but not too high rate, you'll be dropped and effectively pay the same as the new guarantee rate.
“Finally there’s a rare circumstance for people who fixed really recently at very high rates, to try and forestall what was coming, that even with the reduction, you’ll be above the price guarantee rate.
“These reductions will be automatic, you do not need to do anything and there is no point in calling your firm. It’ll probably be a couple of weeks until they factor that in to everybody’s prices.
“So for the few people who fixed very recently: A few days ago I had an energy summit.
"At that meeting, I asked them, would they guarantee that anyone who is on a fixed rate that is more expensive than the price guarantee would be able to leave without an early exit penalty to move to the guarantee rate?
"This was British Gas, Ovo, Shell, SSE, Octopus, EDF, Eon, and I’ve since found out Scottish Power won’t levy early exit fees either.”
READ NEXT-
Die-hard Edinburgh royal fans line up with chairs hours before Queen's procession
Experts share what Meghan Markle appeared to say while reading Queen's tributes
Edinburgh Queen's procession - coffin route, road closures, traffic and weather
King Charles III to arrive in Edinburgh ahead of Queen's coffin procession to St Giles
Daniel Craig reflects on 'incredible' 007 comedy sketch with Queen Elizabeth II
