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.
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.
“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.
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