With petrol prices expected to soar due to conflict in the Middle East, Martin Lewis has warned household energy bills are set to rise too.
In his weekly newsletter, the Money Saving Expert (MSE) founder detailed how wholesale costs are currently ‘spiking’, after companies suspended sailing through the Strait of Hormuz, which carries around 20% of the world’s oil and gas supplies.
According to the consumer finance guru, wholesale gas rates (up 90% on last week) are a ‘prime driver of UK electricity prices’, meaning if this spike is sustained, we’re ‘likely’ to see the energy price cap increase from July too.
And while it’s difficult to predict what will actually transpire, millions of households on their provider’s standard tariff across England, Scotland and Wales could be impacted.
Thankfully, Martin says acting now can mitigate the worst of any potential hikes, explaining: ‘If you can get off the Energy Price Cap right now, you should… and urgently.’
In terms of options, MSE says swapping to a fix may help provide ‘peace of mind, but many firms have already repriced their cheapest fixes upwards’ following global unrest.
As of yesterday evening, some companies still had deals available for 14% less than the current cap, so it’s worth checking what’s still out there (ideally ASAP) using a comparison tool like Cheap Energy Club.
It’s also worth noting that the rate you lock in at will be reduced by around 7% to 9% on April 1, thanks to a Government rule change to how bills work.
In a move Martin calls ‘unprecedented’, certain policy costs are being moved to general taxation, reducing the gas and electricity unit prices paid by consumers — including those already locked into a fixed tariff.
Worried about fixing in case your provider goes bust?
‘That’s always a risk,’ writes Martin in an article on the MSE site.
‘But in the, hopefully, unlikely event that happens, your credit is protected and you are moved to a new firm – the worst thing is you’d then be back on the price cap. Meanwhile, as the cheapest fixes are cheaper than the price cap, you’ve saved.’
Despite this, he urges people to remember: ‘This is about getting a cheap fix, not any fix.’
With the global situation changing rapidly, and providers pulling their best offers at a moment’s notice, it’s possible fixes ‘may get cheaper again soon, and waiting could’ve made it cheaper.’
Martin recommends thoroughly comparing your options before making a move, avoiding anything that’s not ‘materially cheaper than the price cap from day one.’
Are you planning to switch your energy supplier in light of the potential price hikes?
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Yes, I will explore switching as soon as possible.
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Maybe, I need to do more research first.
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No, I think I'll stick with my current provider.
‘If you want to protect yourself from any future rises, now could be a good time to switch – and you could save up to £917 on your bills,’ comments Alastair Douglas, TotallyMoney CEO.
‘Most switches take place within five working days, all your plugs and pipes stay the same, and nobody needs to visit your home to change things over.
‘Before you make the move, check whether you’re tied into an existing deal. Early exit fees can cost around £50 per fuel – so £100 in total. But if you’re in the last 49 days of your contract, you won’t be charged.
‘And if you’ve not switched in a year, there’s a good chance you’re completely free to move.’
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