Martin Lewis has spoken out on why bills won't drop despite a drop in wholesale gas prices. The money saving expert appeared on Good Morning Britain on Wednesday (September 21) to speak on the programme's segement dedicated to the cost of living crisis.
Liz Truss set out plans to freeze energy bills at an average of £2,500 a year for two years in her first big act as Prime Minster. The new policy along with a support package for homes and businesses marks one of the biggest government interventions since the financial crisis.
It has been confirmed that prices will drop for most under the Government's new price cap guarantee, but only at most to the level of the new price cap that's on variable tariffs.
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Appearing on GMB beside Susanna Reid, Lewis said: "They have dropped, but they're still incredibly high and what it would have affected is the October price cap due to come in going up 80 per cent. That was locked in.
"The January price cap was still being assessed, so had we still been on that January price cap it probably now would have not risen as much as we expected due to this slight lowering in gas prices - but that's all gone. We're on a price guarantee rate which locks in prices for two years from October 1.
"That is cheaper than the old price cap would have been anyway. Looking at the wholesale gas rates isn't going to give you anything now. The rate we have now is pretty much locked in for the next two years."
He also issued an nine-day warning for customers looking to top-up pre-payment keys ahead of the October rise, asking people if they are able to keep the current rate to forestall the increase. "The answer is no on gas metres, no on smart metres but possibly on key and card pre-payment electricity metres."
Martin said this would not work for people signed up to E.On or Scottish Power who have advised him it would not work under their structure.
For those on a fixed rate above the price guarantee, Lewis explained that there are currently no fixed tariffs that will save you money compared with the Government's new price cap guarantee. The Government has said from October 1 the same 4p/kWh gas, and 17p/kWh electricity reduction will apply to many fixed rates too.
"Because economy 7 is a time of use tariff, which means you have different rates at different times of the day, what I have been told is that they will use an average reduction on the two rates to reduce the two rates that give you the same average. It will be up to the energy firm itself to apply exactly how that works but you should get that same reduction."
Lewis has advised it's safest to do nothing for those on a fixed rate.
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