We know it’s summer and your energy bills are probably the last thing on your agenda. However, MoneySavingExpert, Martin Lewis has announced that an energy price crisis has set in and warns that now is the time to take action before prices spike again in winter. Here is our summary of Martin’s predictions to help you save money on your gas and electricity bills now, before it’s too late.
What is the energy crisis scenario and why haven’t I heard about it yet?
The first thing to note is that wholesale prices (those are the prices gas and electricity firms pay for the energy) are currently at a three-year high and have gone up 30% since March alone. In short, wholesale prices are absolutely spiking and that will feed through to domestic consumers.
All the very cheap fixed deals seem to have been withdrawn from the market and some companies have started to announce energy price hikes – Bulb’s variable deal is going up at the end of June 2021 by about 6% and that will leave it £12 cheaper than the price cap on typical use (a tariff that was once £200 cheaper than the price cap). That’s 1.7 million customers facing their second hit this year. Pure Planet have also announced an increase to variable prices.
The price cap is the reason you probably will not have heard about the price crisis as yet. Big companies such as British Gas, SSE, Scottish Power, npower, EDF and E. ON, are locked in a price cap. Without it, newspapers would be full of British Gas and other big companies announcing price hikes whenever they want – the cap prevents them from putting prices up until October when the price cap may move again.
Now, because we are currently through the price gap assessment period, Martin Lewis predicts that in October we’ll see a hike in the price cap again by another £50 – £100 a year. While you may not be aware that there is a crisis in energy (mainly due to the fact that the newspapers only tend to cover the big energy companies pushing prices up), what is happening now will hit your bills in winter and this is possibly your last opportunity to be able to do something about it.
So, what can I do about it I hear you ask?
Well, you can do the obvious and go on a comparison site. The only challenge with comparison sites at the moment is that all the very cheap tariffs are variable deals which means their prices can go up. However, if you look at the cheapest of those tariffs and prepare for around a 10% price hike, they will likely still be worth doing. If you want absolute certainty, find yourself a fixed rate deal but, if you are prepared to take a bit of a gamble go for the cheapest variable with decent service, and accept that it is probably going to have a bit of a price hike in the next month or two (by 5 or 10%). If it does increase its price, you will still likely be paying less than elsewhere and if it puts prices up by even more then you may need to leave again. Fear not though, none of the cheap variables have exit penalties.
Top tip when doing a comparison right now:
When you go on a comparison website, it tells you how much you’ll save compared to doing nothing. However, right now, that saving for most people will be underestimated because most people will be paying the price cap (which in October is almost certain to rocket). So, when you look at the saving, add on £50 to £60 in your head, for example if it’s saying you’ll save £100 – in reality you could probably save £160 a year compared to what it is actually showing you.
To conclude, if you have not sorted your energy bills out in the last 6 months to a year, NOW IS THE TIME TO DO IT, or come next winter you might have an opportunity to save as much money.
Don’t like comparisons?
There are lots of different solutions being put into the energy comparison market now for people that aren’t good at comparing that take some of the pressure off of decision making. Just let pick me a tariff tool do the hard work for you.