Martin Lewis: What if you have credit with your old energy provider?
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In his latest MoneySavingExpert’s Money Tips Email, Martin Lewis shared tips about the energy price crisis. The energy price cap is the maximum amount suppliers can charge customers on variable tariffs and it is reviewed by market regulator Ofgem twice a year, in both April and October.
This year, an increase in wholesale energy costs as global demand recovers means the new cap is £139 higher than the previous.
The price cap affects those on a variable tariff.
Sharing advice in his latest MoneySavingExpert’s Money Tips Email, Martin shared tips about the energy price crisis.
Responding to a question about changing energy providers, Martin warned people to “do nothing”.
He wrote: “Do nothing – the energy price cap is the cheapest deal. The price cap limits what providers can charge on their standard variable (default) tariffs.
“There are no meaningfully cheaper switches available right now.
“The cheapest fixed deal is 35 percent (around £450/year more for someone on typical bills), and my best guess is that gap makes it too big a premium to make it worth moving right now.”
Martin also advised Britons to do an energy price comparison using the MoneySavingExpert online tool.
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What does the price cap actually mean?
The expert explained that people should think of it as more of a “rate cap” rather than a “price cap”.
He said: “There’s no maximum you can pay for your domestic energy.
“The £1,277/yr rate is just what the cap would be for someone on the regulator’s defined ’typical use’.
“The best way to think of it is as a cap on the rate you pay for each unit of energy you use. So use more, and you pay more.”
Martin also explained the reason why people should stay put with their energy supplier on his latest episode of The Martin Lewis Money Show on ITV.
He told viewers: “Do nothing, do nothing. Energy prices are rising, energy firms are falling.”
The expert added: “Two weeks ago I had alternative solutions, now I have no alternate solutions. The answer is there is nothing meaningfully cheaper than the price cap.
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“There are no fixes close to the price cap. The answer for most people is do nothing and go on to the price cap.”
Due to the huge hike this year, many are also wondering whether or not it could rise again in April.
Martin explained in his newsletter that the price cap will “almost certainly” raise again, possibly by 30 percent.
He wrote: “Each cap lasts six months – the current one finishes on March 31.
“It’s best to think of it as a six-month fixed tariff you can leave at any time if, and hopefully when, other tariffs get cheaper.”
It comes after energy suppliers including Igloo Energy, Symbio Energy and Enstroga have all ceased trading in recent weeks because of continued high wholesale energy prices.
Ofgem has said more suppliers may go bust in the next few months because of the issue.
To find out more and sign up to Martin Lewis’ weekly newsletter, visit www.moneysavingexpert.com/latesttip
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