You could save approximately £129 starting today
Martin Lewis has shared some “better news” when it comes to Ofgem’s energy price cap. Earlier this month, the Money Saving Expert predicted that energy bills are expected to rise towards the end of this year.
He suggested millions of UK households may experience an increase in their energy price caps in October due to conflict in the Middle East. However, Martin has now confirmed that the increase will no longer take place. In a statement on social media, he wrote: “Better news! Ofgem’s energy Price Cap that dictates the rate 2/3 homes in Eng, Scot & Wales was cut by 7% today, and is no longer predicted to rise in October.
“It impacts all those who aren’t on fixes or special deals. I’ve knocked up this table showing today’s new average predictions (from 3 big firms) for the Cap for someone on supposed ‘typical use’ (which for July-Oct is £1,720/yr); though far more relevant is the predicted % change as that’s roughly what’ll hit all homes.
“We’re now around half way through the assessment period for the 1 Oct Cap. Predictions had risen rapidly on the back of the Israel-Iran conflict, but now that has calmed, wholesale rates have fallen back and the predictions have dropped.“Yet remember the Cap is set based upon an average over three months, so the wholesale rates spike is still baked in, even though its now fallen, so significant falls in October would take continued big falls in the wholesale rate.“Once you get to January, it is just crystal ball gazing. Still with the cheapest fixes currently around 9% less than the current price cap, they look a very good bet for those on standard (ie Price Capped) tariffs if these predictions are right (just ensure low exit penalties so if things did change you could get out).”
For a typical household paying by direct debit, the average annual bill is £1,849. But Martin has explained the energy price cap was cut by 7% today.
Direct debit customers with a typical dual fuel arrangement can expert their annual energy costs to drop from £1,849 to £1,720 starting today, saving them £129.
This is £660 (28%) lower than at the height of the energy crisis at the start of 2023 when the government implemented the energy price guarantee. However, prices remain elevated with the upcoming level £152 (10%) higher than the same period last year.
Martin explained the change in “simple terms” earlier this year. He shared: “In simple terms it means for every £100 you pay for energy now, in July, August & September you will typically pay roughly £93.00.”
Tim Jarvis, director general of markets at Ofgem, said: “A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy.
“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you. And changing your payment method to direct debit or smart pay as you go can save you up to £136.
“In the longer term, we need an energy system where prices are insulated from the volatile international gas market, and which ensures more stable prices and energy security.
“And we’re working closely with government to get the investment we need to reach our clean power and net zero targets as quickly as possible.
“We’re also doing everything we can to support consumers today and pushing ahead with more changes to help consumers. This includes working on ways to support those trapped in energy debt and bringing in reforms to standing charge tariffs for this winter.”
