There are no cheap energy tariffs. Message from Martin Lewis about cheap energy prices

Stuart Wright

AVForums Founder
Staff member
Hi Stuart,

The energy market is in extreme crisis. Wholesale gas prices – which firms pay – have risen fivefold in the last year. Much of the UK’s electricity is generated by gas too. This means both gas and electricity prices for consumers have rocketed to previously unimaginable levels.

For energy switching the situation is catastrophic. Nine energy firms, with nearly two million customers between them, have gone bust, and more are almost certain to follow (so I’d urge everyone to download your bill, and screengrab your credit so you’ve got a record). There are no decent tariffs left to switch to – in fact, there are very few tariffs for new customers at all.

On the back of this, I’ve spoken with the team and asked them to temporarily change the way that we operate Cheap Energy Club, and I wanted to let you know what we’re doing.

I’ve asked the team to pause sending you energy alerts for now.

You chose for us to let you know via email when there are cheap tariffs you can switch to. These don’t exist at the moment. So we simply won’t be sending you any alerts, though if you’re on a fixed deal right now, we will let you know when your tariff is about to end, and that you’re being moved to a standard price-capped tariff.

Here are the key need-to-knows to explain why:
  • There are no switchable deals meaningfully cheaper than the price cap. We are in the perverse situation where there is nothing meaningfully cheaper than the default price you go to when a deal ends (or if you've never switched). Even though the regulator’s price cap jumped by 12% on Friday 1 October, it is still set substantially below the current cost price of energy – the main reason so many firms are going bust.
  • If / when you come off a fix, you will pay a lot more. There’s no getting away from this I’m afraid. Many coming off cheap fixes will find themselves paying up to 50% more than they were – when they move to the price cap – but there is currently no solution. If you do want to fix you’ll pay even more as the current cheapest fix is 30% higher than the price cap, so for most the premium isn’t worth it.
  • Consider the price cap a ‘six-month fix’. The new price cap rate is locked in until 1 April 2022, and it will almost certainly rise substantially again then (see why in price cap FAQs). So for the moment consider it a six-month fix, at the market’s cheapest available rate, which you can leave penalty-free at any time.

    Then let’s hope in the meantime that wholesale prices drop and cheaper switchers' tariffs become available. If and when that happens, we will of course restart the alerts.

Meanwhile, if you want to see what’s out there (for example, to get a fixed rate for surety even though it is at a heavy premium), you can always come to the site to do a comparison.

Martin

So sticking to the capped rate is best at the moment.
 

danwel

Active Member
Just literally got this email myself too. Came to that conclusion the other week when we looked at deals but it was too late at that point and not worth changing
 

Colin London

Well-known Member
What people are not understanding is that they do NOT have to take a new deal when they get to the end of their fixed term contracts. Doing nothing is the thing to do at the moment because your supplier will have to move you onto their (capped) flexible tariff by default.
 

Colin London

Well-known Member
Although going onto a capped variable deal is the only option at the moment, it looks like that cap may go up another £400 on average in April next year!

So we have to hope that wholesale prices come back down before April and the fixed deals start becoming the cheaper choice again.
 

wormvortex

Member
I saw it as more sense fixing with E.on on a deal with £0 exit fees. If everything sorts itself out before the next cap rise I leave and find a cheaper deal. If the current situation continues then I will be happy knowing I fixed.
 

oneman

Well-known Member
What people are not understanding is that they do NOT have to take a new deal when they get to the end of their fixed term contracts. Doing nothing is the thing to do at the moment because your supplier will have to move you onto their (capped) flexible tariff by default.
What is the ofgem cap rate at the moment ?
 

Colin London

Well-known Member
What is the ofgem cap rate at the moment ?
It is hard to work out what it means to a consumer as it depends where you live and how you pay. The examples used in the press of annual cost are based on an 'average household' (TBD). Ofgem don't help you calculate the unit costs - They basically tell you to get info from your supplier. There is an industry web page here: Default tariff cap level: 1 October 2021 to 31 March 2022

However, most flexible / out of contract tariffs will presently be at the cap so getting the unit prices of your suppliers flexible deal will probably tell you what the capped unit price is in your area.
 

Colin London

Well-known Member
In my area my suppliers flexible unit rates and standing charges are:

Electricity​

  • Unit rate:20.67 p/kWh Standing charge:24.01 p/day

Gas​

  • Unit rate:4.01 p/kWh Standing charge:26.11 p/day
 

Ilovewaffles

Well-known Member
Received email from EDF that my fixed term contract ends on November 30 th 2021.
I have looked at the tariffs available and don’t like any of them!
Standard variable £98 a month, no early exit fee.
Short fixed term- one year- £163 a month, early exit fee £70
Long fixed term- two years- £144 a month, early exit fee £200
I’m tempted to choose the standard variable , but I’m not mystic Meg, and the monthly fee might shoot above £163 in the next couple of years .
What have others in a similar posit chosen. ?
 

krish

Distinguished Member
The advice for anyone just off contract is to not sign up for anything, just to stick with their supplier's variable, and also not to fall for their supplier's potentially dodgy offers of a new fixed rate deal, pricier than the current capped variable.
 

Ilovewaffles

Well-known Member
The advice for anyone just off contract is to not sign up for anything, just to stick with their supplier's variable, and also not to fall for their supplier's potentially dodgy offers of a new fixed rate deal, pricier than the current capped variable.
Thanks - that what I was thinking .
 

wormvortex

Member
The advice for anyone just off contract is to not sign up for anything, just to stick with their supplier's variable, and also not to fall for their supplier's potentially dodgy offers of a new fixed rate deal, pricier than the current capped variable.

Surely better advice would be to compare the fixed deal offered to the variable one and factor in any exit fees (if any). It's very unlikely prices are going down in the near future and highly likely the increase further so why wouldn't you fix if you could for a similar or cheaper price if it's there?
 

krish

Distinguished Member
Surely better advice would be to compare the fixed deal offered to the variable one and factor in any exit fees (if any).
Yep in normal circumstances, however there aren't great fixed deals, if any, at the moment (hence they dropped off all comparison sites), and it's been widely reported that some suppliers are pushing fixed deals which are pricier than the cap.

Do nothing for now has been the advice of both Martin Lewis and Uswitch.

why wouldn't you fix if you could for a similar or cheaper price if it's there?
it's not there, they've been reported to be £700 - £800 higher than the cap
 

wormvortex

Member
WOW just looked with my figures. I fixed a few months ago on a no exit fee one for £99 a month which was less than the variable. Those same figures now for the same company fixed are coming in at £197 a month!!
 

Miss Mandy

Moderator
My Octopus deal ends in a couple of weeks. I’ve been paying £51 a month and I’m £90 in credit. If I let the account switch to the variable rate they estimate it’ll be around £76 a month and the fixed deal they’ve offered is £107 a month. Suffice to say I’m going to take my chances on the variable rate for now because £107 a month for a single occupancy one bed flat is insane.
I had a new boiler fitted in the spring and hopefully this winter we won’t have lockdowns or forced periods of working from home so I should be able to reduce my usage too which will help.
 

ih8mondays

Active Member
Variable probably makes sense as you’ll use more energy during the winter. When the price cap is next changed it’ll be spring I think, and hopefully warmer, less heating needed, etc.
 

Ilovewaffles

Well-known Member
What happened to the poster who signed up with Bulb, which is apparently going under next week? Did he get his £25 for switching?
I was horrified when I saw the monthly DDs for the fixed deals! I am only paying £ 60 at the moment , until end of November when my contract ends, it will be 98 per month then on the standard variable! People will be frightened to put their heating on.
 

neilball

Well-known Member
One thing to factor in is that the price cap is likely to increase in April by approx. 30% based on how wholesale costs have moved recently. If the wholesale prices stay high until April (or increase) then it could go up by more - the current price cap is not yet affected by the really high wholesale costs that energy companies have faced in recent months.
 

stepahead

Standard Member
Been paying £88pm with Bulb for past 4 years on the Vari-Fair tariff (both gas & elec).

Since Sept 2020 they've implemented 3 or 4 price increases but our DD never changed as we'd built up a hefty credit balance, which they use for any usage above our DD amount.

Once the rumours started several weeks ago that Bulb were going bust, I had our credit balance refunded resulting in them increasing our DD by £50pm.

I'm hoping Bulb will survive as we've always had a good service and the mobile app is so easy to use for submitting meter readings and seeing our bills etc. More importantly, they've always come out way cheaper than other suppliers... which is probably why they're in the s**t now.

My understanding from Twitter is Bulb are seeking a buyout. We'll sit tight and see what happens.
 

Tel69

Active Member
Brace yourselves! The latest comments suggest bills could increase by 40%. Wholesale prices have gone crazy again on the back of Germany delaying certification of Nord Stream 2. Ofgem & Government have to take action.

 

neilball

Well-known Member
Annual electricity costs for me in 2018 was £1.8k per year (20,000kWh) prices increased to £2.4k on my last fix with Symbio (cheapest tested I could get) before they went bust. Now looking at paying £4.2k on the price cap now, so another 40% in April takes this to £5.8k/year! A £4k per year increase from just a few years ago in annual fuel costs is pretty sobering, and that might not be the end of the increases while the energy markets remain so volatile.
 

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