Martin Lewis has shared an essential list of need-to-knows for all domestic energy customers following last week’s announcement from new Prime Minister, Liz Truss, that energy bills for the average household will be frozen at no more than £2,500 for the next two years.
The PM’s plan will be in palace until 2024 and is expected to save the average household around £1,000 from October, protecting billpayers from further expected rises over the coming months. However, it’s important to be aware that the £2,500 Energy Price Guarantee isn’t the maximum amount households could pay - use more and you’ll pay more, use less and you’ll pay less.
Something Martin Lewis has been trying to drill into everyone over recent months to help them budget for the colder months ahead. The consumer champion has also been instrumental in pushing the UK Government and energy firms to provide more financial support for millions of households across the UK.
Writing in the latest MoneySavingExpert.com newsletter, he said: “I've spent months trying to raise the alarm over the energy bills catastrophe due this winter - that'd been set to take a typical bill to over five grand.
“My plea was for urgent intervention, so I welcome last Thursday's energy price guarantee announcement, which does just that.”
But he added: “It's not perfect, though I'm not sure any plan would be.”
The financial guru also announced that during an ‘energy summit’ meeting with CEO’s from British Gas, Ovo, SSE, Octopus, EDF, E.on and Shell, he managed to guarantee assurance for fixed tariff customers that they will not be hit with an early exit penalty for switching to the Energy Price Guarantee, which will essentially become the standard tariff until 2024.
He explained that this assurance will be in place until at least November 15, but warned energy customers not to call their suppliers just yet as they will not have details on it right now.
His advice is to ‘do nothing’ until more technical aspects of the Energy Price Guarantee have been released and all energy firms are in a position to offer customers the best option.
Martin wrote: “Today in the energy summit at MSE Towers with the big firms' CEOs, all firms there - Brit Gas, Ovo (SSE), Octopus, EDF, E.on, Shell - agreed to my request that customers who end up on fixes at a higher rate than the price guarantee WILL be allowed to move on to that firm's price guarantee tariff, with no early exit penalties, until at least 15 Nov (some beyond that). Note Scottish Power chooses not to attend the summits.”
The founder of MoneySavingExpert.com also explained how the Energy Price Guarantee will impact those on a fixed tariff while co-hosting Wednesday’s edition of Good Morning Britain alongside Sussnnah Reid.
He explained to viewers how the Energy Price Guarantee for those currently on the standard tariff will be applied as a reduction to the planned October unit rates.
From October 1, the same 4p/kWh for gas, and 17p/kWh for electricity reduction will apply to most fixed rates too.
He said: “The final guidance for fixes has not been signed off yet, so I’m doing this based on my understanding of both what the UK Government has said and what I’ve been told by the energy firms that the Government has told them, though I haven’t seen that yet.”
Impact of Energy Price Guarantee on fixed tariffs
Martin simplified how it will impact households on different tariff fixes:
Cheap fix below the Energy Price Guarantee
- If you pay less than the Energy Price Guarantee, there’s no change
Fix is higher than the Energy Price Guarantee
- It will be reduced to the same level as the new Energy Price Guarantee
You fixed recently at a high rate to offset projected increases to the energy price cap
- Your fixed rate will reduce, but may still be higher than the Energy Price Guarantee, however, you may be able to switch tariffs without paying the early exit penalty
Martin also urged viewers not to call their energy firms just yet until the details of the Energy Price Guarantee have been fully released to firms.
He said: “The fix details are not firm yet, do not call your energy company and ask them what you’ll be on, they will not give you an answer because they do not know.
“You should not be doing anything right now because the exit penalties would still be charged, this is just a ‘wait and see’ moment.”
You can read Martin’s full list of Energy Price Guarantee need-to-knows on MoneySavingExpert.com here.
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