Energy bills are expected to marginally drop in October and as more fixed tariffs emerge, many are questioning what a “good deal” really looks like.
Financial journalist and founder of Money Saving Expert, Martin Lewis, answered the question posed to him on ITV’s This Morning programme earlier today, sharing his rough estimations of what fixed energy tariffs could be worth looking into.
Addressing a viewer, who asked: “Should I lock into another fixed tariff or wait until the new year?”, Mr Lewis said: “Here’s what we currently think. Here’s what we know and then what’s predicted and then the crystal ball about what’s going to happen to energy prices. And this is about the price cap.
“On the 1st of October, we know it’s dropping by an average seven percent. Then the prediction is in January, it’s going up by six percent. So it’ll be slightly cheaper than it is now, but still more expensive than it was from October to January.”
In April, Mr Lewis said the price cap is expected to fall again by three percent. However, he noted: “The further out you go, the more crystal ball gazing it is.”
However, he noted, if those predictions, which come from analysts Cornwall Insight, turn out to be true and they do vary on a regular basis, then people could look into securing a fixed deal that’s “about five percent cheaper” than the current price cap.
For the period from July to September 2023, the Ofgem price cap has been set at £2,074 for a typical household per year.
From October 1, the price cap will fall to around £1,923 – a reduction of around £151 a year, based on the current price cap unit rates.
Mr Lewis said: “If you can get a fixed deal at five percent or more cheaper than the current price cap, that looks a good deal right now.
“I can’t promise it will with hindsight but if you really want price certainty, a fix might be worth it.
“But if it’s about the same price as now, then it doesn’t look to be a good deal, based on the information we have right now as to whether those fixes are available.”
Mr Lewis said there are “a couple of them out there”, but most of the “best ones” are existing customer-only fixes. He added: “It depends on whether your company offers you one.
“That would be my very rough benchmark. But a lot of crystal ball gazing here.
“If you can get a fix at around five percent cheaper than you’re currently paying if you’re on the price cap, that looks like a good deal over the next year based on the predictions, but they’re only predictions.”
ITV’s This Morning airs on weekdays from 10am.