Martin Lewis: Energy price cap to rise by 51% on 1 April - should you fix now?

Former_MSE_James_F

I've been calling for Government intervention to prevent an energy bill crisis before 1 April, when the price cap - which most bills are now based on - is predicted to rise 51% adding typically £600/yr to bills, a nightmare that'll throw millions into fuel poverty. Unsurprisingly, with this prediction many are asking me if they should now move off the price cap to fix? 

Read the full story here:
'Martin Lewis: Energy price cap to rise by 51% on 1 April - should you fix now?'

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booshya

Click Bait

Summary:
Confused? Most should still DO NOTHING and stick on the price cap.

So no change yet since last October's article:
https://www.moneysavingexpert.com/news/2021/10/martin-lewis---do-nothing--with-your-energy-supplier/

I wonder if this will ever beat the MSE 'BoE has not changed it's interest rate again' reporting?

Swipe

If you think it's busy in here now, wait until 1st April

RFB_2

If you're offered a fix that's no more than 40% costlier than your current price-capped tariff, it's worth considering - especially if you value budgeting certainty

When comparing costs do we need to compare just  the per unit cost or do we need to calculate over a full year including the daily standing charges?

What exactly do you mean by 40% costlier?

PennineAcute

RFB_2 said:

If you're offered a fix that's no more than 40% costlier than your current price-capped tariff, it's worth considering - especially if you value budgeting certainty

When comparing costs do we need to compare just  the per unit cost or do we need to calculate over a full year including the daily standing charges?

What exactly do you mean by 40% costlier?

The current cap is based on 2900 kWh of electricity and 12000 kWh of gas and is currently £1277.

If you can find a fixed rate tariff for less than 40% of £1277, so less than £1787.80 (for 2900kWh of elec and 120000 kWh of gas) it may be worth taking.

For example, in the middle of December, I fixed (for the above usage) for £1490.38 which is a 16.7% increase on the current cap.  Whether I was right to do this remains to be seen.  If wholesale prices stay like they are, and there is no Government intervention, I think my decision will pay dividend.

swaledale_one

'The equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 21p per kWh for electricity customers and 4p per kWh for gas customers' (quote from Ofgem)

So the capped rate for gas is currently 4p yet most energy firms are trying to get people to lock in to fixed rates above 8p and in EDF case it's over 10p yet if the cap goes up by 50% in April that brings the cost of gas to up to only 6p for folk on variable.

It's shocking how much misinformation is out there and I won't go into how vague the official information on the price cap is, I still can't find for certain what the capped standing charge rates actually are.

savers_united

As we get closer to April those numbers will change, so for example fixing last month would not have been advised unless it was almost on par with the capped rate, as you would be giving up a large chunk of the capped tariff during the colder months for a higher rate, now we are almost mid Jan its 40%, next month it may be 50% and so on. It really is a moving picture at the minute. 

MWT

swaledale_one said:

It's shocking how much misinformation is out there and I won't go into how vague the official information on the price cap is, I still can't find for certain what the capped standing charge rates actually are.

That is one of the easier numbers to locate in the Ofgem cap model:

Electricity - Other payment method (DD in advance)

North West	£84.76
Northern	£91.98
Yorkshire	£93.25
Northern Scotland	£95.23
Southern	£83.82
Southern Scotland	£86.44
N Wales and Mersey	£81.69
London	£81.02
South East	£83.56
Eastern	£83.49
East Midlands	£82.63
Midlands	£87.23
Southern Western	£89.21
South Wales	£86.44
GB average	£86.48
GB average, inc VAT (at 5%)	£90.81

Those are the annual cap on the standing charge, excluding VAT.

So add 5% VAT and divide by 365...

For gas...

North West	£90.81
Northern	£90.81
Yorkshire	£90.81
Northern Scotland	£90.81
Southern	£90.81
Southern Scotland	£90.81
N Wales and Mersey	£90.81
London	£90.81
South East	£90.81
Eastern	£90.81
East Midlands	£90.81
Midlands	£90.81
Southern Western	£90.81
South Wales	£90.81
GB average	£90.81
GB average, inc VAT (at 5%)	£95.35

Planeteer

If overall a 2yr fixed deal (SSE) is 20% more expensive p.a. than my current SVR deal (Octopus) with my specific consumption figures, does it mean it beats the 40% threshold suggested by Martin for a fix switch? Basically wondering if I should go for it - as I just read the BBC news article that prices are expected to rise for the next 1.5-2 yrs.

mdjuergens

swaledale_one said:

'The equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 21p per kWh for electricity customers and 4p per kWh for gas customers' (quote from Ofgem)

So the capped rate for gas is currently 4p yet most energy firms are trying to get people to lock in to fixed rates above 8p and in EDF case it's over 10p yet if the cap goes up by 50% in April that brings the cost of gas to up to only 6p for folk on variable.

It's shocking how much misinformation is out there and I won't go into how vague the official information on the price cap is, I still can't find for certain what the capped standing charge rates actually are.

I wish things were explained in detail. The way I UNDERSTAND it is that the when the price cap goes up the total bill for a "typical user" will increase by 50(ish) %. It is likely that this will be made up of a modest increase of the standing charges, a significant increase of the kW costs of electricity and a horrendous increase of the gas price. I just signed up for a 1 year fix when my current fix ends in 10 days. I will tell you next year whether that was a good move or not!

JuMoon

This is my first post so thanks in advance for any help.
I'm with Scottish Power, currently fixed until 28/2/22 on £14.27 and £2.60 Gas. Been offered 1 year fixed £28.07 Elec and £6.75 Gas - which is obviously a big increase for me but I do think is still better than going onto capped rate?  

Two questions - the one year fixed rate has £60 exit fees, but I can do a two year fix with no exit fees. Is this situation likely to go on for 2 years? Best to fix for 1 or 2 years?

Also, Should I do it now, and obviously pay way more for the next 47 days (no exit fees), or hang fire til end of my fixed period and risk it going up?

It's all rather unsettling!