Martin Lewis’ ‘rule of thumb’ to secure a ‘decent’ fixed energy tariff deal

While Britons anticipate energy prices to marginally drop in July, many have been questioning whether it’s a good idea to opt for a fixed deal.

Financial journalist Martin Lewis took to ITV’s Good Morning Britain today to share his thoughts, before offering viewers his “rule of thumb” to know if they’re securing a “decent” deal.

Mr Lewis said that while “very few” companies after offering fixed energy tariffs – and if they are, they’re typically only offering them to existing customers – there are certain details people should look out for to ensure they’re being offered a good rate.

He said: “My rule of thumb if you’re being offered an energy fix at the moment, is don’t look at the current rate.

“Compare the fixed rates you’re being offered to the rates you’ll be charged once the price cap drops in July.”

READ MORE: British Gas energy support fund offers grants to hard-up Britons

Mr Lewis explained: “If the fix is about the same or cheaper, then based on current predictions (and I don’t have a crystal ball so they may be wrong), that looks like a decent deal.”

However, he noted that if it’s “quite a bit more” than the new July price cap prices, which are predicted to be set at an annual level of £2,074 for an average household, then he “probably wouldn’t go for it”.

Mr Lewis said: “But the honest truth is there are only about 20 percent of people in the country who can access a fix at the moment, and probably only two or three percent of those should be getting a fix.

“So we haven’t quite seen the floodgates open on energy fixing, but there are some people for whom it’s worth it.”

Mr Lewis added that he’d be explaining this in greater depth during The Martin Lewis Money Show tonight, which will air on ITV at 8pm.

What is the energy price cap and what is July’s prediction?

The energy price cap was introduced in 2019 by energy regulator Ofgem to prevent service providers from making excessive profits from customers.

Essentially, the cap is there to stop energy suppliers from charging any prices they like per kWh of energy used, while also taking into account the real wholesale energy price. This prevents suppliers from purchasing energy at a higher price than they are selling and is meant to ensure a “fair” price for all.

Increasing wholesale prices sent the energy price cap soaring to highs exceeding £4,000 a year on average, leading to the Government’s intervention with the Energy Price Guarantee (EPG). This subsidised the energy price cap to bring household bills down to a more affordable – but still staggering high – level of £2,500 a year on average.

It also introduced the Energy Bill Support Scheme (EBSS), which provided eligible households with a £400 rebate paid in six instalments to reduce bills even further until March 2023.

In May, Ofgem announced that the price cap will drop to £2,074 from July 1 and as this is lower than the EPG, this metric will be used instead.

Although the falling price cap will be good news for many, Steve Buckley, head of data science at Loop noted: “It’s important to remember that prices are still higher than before the energy crisis and unlikely to return for some time.”

He continued: “With no cheap deals available on the market, the only way to reduce your energy bill at the moment is by using less energy.

“There are lots of ways you can reduce your bills: From turning off appliances to reduce your Phantom Load; to reducing your boiler flow temperature and reducing your thermostat by a couple of degrees; to making sure you’ve swapped all your bulbs for super-efficient LEDs.

“Households who better understand their energy usage have more control over their bills. If you measure it, you can control it.”

Good Morning Britain airs on weekdays on ITV between 6am to 9am.