Money-saving expert Martin Lewis is urging households to review their energy tariffs and consider switching to cheaper fixed deals, warning that sticking with the energy price cap could cost consumers more in the long run.
In his weekly newsletter, Lewis highlighted the recent and upcoming increases in the energy price cap and explained how acting now could help households save money.
Energy Price Cap Increases
The energy price cap, which limits the rates energy suppliers can charge per unit of energy, has seen several hikes:
- A 10% increase on 1 October 2024.
- A 1% rise on 1 January 2025.
- Predictions of a further 3% to 5% rise on 1 April 2025.
“Most homes are on an energy price-capped tariff, but the cap is now a ‘pants cap,’” Lewis stated. “Most firms charge at the limit, meaning many can easily switch to a cheaper deal.”
Why Switching Matters
Lewis emphasized that switching to a fixed tariff could lead to immediate savings. “Move to the cheapest fix, and within five working days, you’ll typically be paying around 7% less than those on price-capped tariffs. Plus, the rate is locked in, offering peace of mind against future hikes.”
While no one can predict the future of energy rates with certainty, Lewis advised consumers to regularly compare tariffs to find the best deal for their circumstances, noting that “loyalty isn’t rewarded” in today’s energy market.
Understanding the Current Price Cap
From 1 January to 31 March 2025, the energy price cap for a typical household paying by direct debit is £1,738 per year. For households paying on receipt of a bill, the cap rises to £1,851 per year. Prepayment customers have a different cap, but all rates are based on typical usage—households using more energy will pay more.
How to Switch Tariffs
Lewis outlined simple steps for switching to a fixed deal:
- Gather Your Details: You’ll need your current supplier, usage information, and payment method.
- Compare Deals: Use a comparison website or check with your provider for their best offers. Factor in exit fees, tariff lengths, and type.
- Make the Switch: Choose a deal online or over the phone. The new supplier handles the transfer, and there’s no interruption to your energy supply.
Peace of Mind
Switching suppliers is straightforward, and households won’t experience any disruption to their energy supply—it’s simply a change in who bills them. Taking a meter reading before the switch ensures a smooth transition.
Final Thoughts
Martin Lewis stressed the importance of proactive energy management: “Staying informed and regularly reviewing your options could save you hundreds each year. Don’t wait for prices to rise further—act now to secure a better deal.”
