Martin Lewis has issued important advice for those on fixed-price energy deals ahead of bill increases in October.
The consumer champion has told households to “do nothing” for now as all fixes which are more expensive than the new energy price guarantee (EPG) will receive an automatic reduction.
The EPG will restrict average domestic bills in England, Scotland and Wales to no more than £2,500 for two years from October – around £500 higher than they are now, but £1,000 lower than they would have been from under Ofgem’s price cap.
The plan was announced by new prime minister Liz Truss last week amid growing concern about the impact of the planned rise in bills.
Up to 15% of households are on fixed tariffs, many locked in at higher prices than the current cap amid previous predictions that it could rise to as high as £7,263 next year.
Many of these customers may have been paying a far higher rate for their energy than if they had remained on a standard variable tariff.
Lewis has now reassured consumers they will not be forced to pay higher prices than the price guarantee after he sought guidance from energy companies.
He tweeted: “All fixes that are more expensive than the new price guarantee rate will see an automatic reduction in Oct (but they will at most only reduce to the level of the new guarantee)
“So for now DO NOTHING…”
He said that during an energy summit on Wednesday, the major energy suppliers had agreed that households (maybe 1%) whose fixes still cost over the price guarantee after this could switch to the lower price without exit penalties.
This would last until at least 15 November.
He stressed that you should not “waste time” calling firms yet as they did not have complete information from the government, and 99% of fixers did not need to do anything anyway.
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Lewis expanded on his advice on the Money Savings Expert website, adding his understanding was the reduction would only apply to fixes more expensive than the price guarantee.
This would mean households who had a very cheap fix less than the price guarantee would not get a reduction.
Lewis suggested those with mid-level fixes and most high-level fixes would be reduced to the price guarantee but a few of the high-level may still be more expensive than this rate.
He said when the fix ended, households should automatically be switched to the price guarantee if they didn’t choose a different option.
Every household in the UK will also receive the non-repayable £400 payment from the government as part of the cost-of-living support package, which Rishi Sunak announced while chancellor.
It will be applied directly to households’ energy bills, divided into monthly instalments between October and March.
The government has also confirmed that all other support payments promised for this winter will remain in place.