hello i'm martin lewis from moneysavingexpert.com this is an emergency video about the energy bills
catastrophe that's happening right now i'll put a lot more information in the weekly
email that comes from money saving expert on wednesday and i have a full program on
this the martin lewis money show live is back on itv at 8 30 this thursday where
i'll take you through it step by step but this is your heads up what you need to know for now
you'll have seen in the news that energy bills have risen enormously uh um to an
unprecedented level and we've never seen anything like what's happening right now it is an absolute
coincidence of loads of negative factors that are bringing together the wholesale prices those
energy firms pay have gone up four times on gas compared to nearly 20 months ago and that's going
to feed into domestic prices so this isn't a video i'm afraid about cutting your bills and making
them lower this is about damage limitation how do you stop a huge increase to put it in perspective
the cheapest tariffs available today are 40 percent more than the cheapest tariffs
available a year ago so anybody coming off a cheap fixed deal you are going to pay
very very substantially more than you were before and it's about choosing what you do at that point
the other big price you need to know about is the price cap this is the default rate if you like
the maximum the big providers on their standard rates those that you're on if you never switch
or those that you go to once your cheap fix has ended the maximum they're allowed to charge now
on the first of October that is going to increase by 12 percent to 277 pounds while it's called a
price gap it's not a price gap that isn't the maximum you can pay it's actually a cap on rates
the 1277 pounds is what someone with typical usage would pay if you use more your price gap is higher
if you use less your price cap is lower now what you have to understand about the price cap
is it is based on wholesale prices in the six months up to the beginning of august
so prices were rising at that point but nowhere near as extreme as they are right now so all we've
got factored into that price cap is the early part of the price rise and that is pushing it
up twelve percent at the current run rate when it moves again on the first of April next year
you would expect to see the price cap for someone on typical use jump from the 1277 pounds it'll
be from October to around 1500 pounds a year or more that's the scale of rise that we're seeing
now that time lag the fact that they're looking at past prices to set the current one is going
to be hugely positive right now because it locks you in at a price far lower than the cost price
for energy firms which is why so many are going bust but it's going to be really negative in the
future if prices do drop again and then next April you're going to be the maximum price is
going to be much much higher than you're going to be able to get on the cheapest deals on the market
and that is what you have to factor into your logic so here's the choice
you could and i never thought i would say these words you could simply stick with the price cap
the standard variable price that your company is going to charge you when you come off a deal or
that you're on right now because there are very very few tariffs that are cheaper than that so
for the first of October on typical use 1 277 pounds and in effect you've got to fix for six
months that it won't rise in that six months period so you could go onto that and cross
your finger fingers that in the meantime things will get cheaper before we get to next April
and then you do a move afterwards and that is for once a legitimate choice your other alternative
and you've got to go quick on this because i'm not even sure these tariffs will last out the day
is you lock yourself into the cheapest one or two year fix that you can get right now
and there are a couple of deals out there right now where you can fix for a year or two at
slightly lower than where the price cap will jump to on the first of October still have in today's
price cap but lower than the first of October's price cap and you can look in for a year which
means if things do continue to rise and we see next April a huge rise in the price cap
you've locked in at a cheaper rate but as i say those deals are not likely to last for long
if you're locking in on that there will be a small exit penalty to pay if you change your
mind and leave later but frankly compared to the size of the rise at the moment that's it's just
diddly squat it's neither hither or diva a big problem with this is comparison sites most of them
most comparison sites have always for the past few years only shown you tariffs they have a
commercial relationship with by default you can select to see all tariffs but by default
you won't they're allowed to do that that's what the regulations say that they can do
now right now most energy firms have stopped paying comparison sites so if you go and look
at the comparison pretty much every cheat deal out there is not paying and some comparison
sites have even said we're closing down we're not allowing you to do a comparison right now
so you have to be looking whole at market now when i say most i mean virtually all your use which is
your money supermarkets all of them their standard policy is to only show tariffs that pay them by
default they may be turning that off at the moment because we're in an unprecedented situation but
last time i checked that was the score i should of course point out that my comparisons like money
saving experts cheap energy club has always shown you whole of market by default so you'll get all
tariffs on there it doesn't doesn't filter by commercial relationship in that way so you can
just look at that you can see all tariffs but it's very important you do that right now because all
the fixes that are cheaper than uh the price cap come the first of October none of those are paying
comparison sites as far as i'm aware i'd have to double check that this is an emergency video
i haven't dotted my eyes and crossed my teeth first i've just tried to get it out
there as quickly as possible but i'm pretty sure that's the scenario final couple of points look
we are going to see people this winter choosing between heating and eating i mean we already have
the universal cap disappear universal credit extra 20 pound uplift disappearing we have furlough
disappearing the self-employment grants are ending inflation is at a high this is a terrible time for
people's finances and now we have this energy price rise there is help out there look at the
warm home discount though it is telling that the warm home discount has been stuck at 140 pounds
for the 140 pounds it's a lump sum that you get if you're on low incomes it's been at that for
nine years and just in the last year alone the cheapest deals have gone up by 40 percent so
i mean it has certainly not kept pace with the price of energy you can also talk to your energy
company and should talk to your energy company if you're going to struggle to pay your bill
they may have funds and be able to help you to an extent though obviously with these extreme prices
and the fact that they're locked in as a price cap that's effectively below cost for most companies
they're going to be having a tough time and then we'll see how generous they're going to
be to be able to help um customers which is why the government is talking about intervening to
help energy providers take on all those smaller firms that are going to go bust and more will
go bust um i think it also needs to be looking at helping consumers anyway this was meant to
be a quick brief video to help you as i say much more details coming in the weekly email
from moneysavingexpert.com and i will go step by step in my special in the first martin lewis
money show live on itv at 8 30 the series starts this Thursday night i hope this helps someone