Martin Lewis has issued important advice for those with fixed-price energy contracts ahead of bill increases in October.
The consumer champion told households to ‘do nothing’ for now as any fixes that are more expensive than the new energy price guarantee (EPG) will get an automatic discount.
The EPG will limit average domestic bills in England, Scotland and Wales to a maximum of £2,500 for two years from October – around £500 more than they are now, but £1,000 £ less than they would have been under Ofgem’s price cap.
The plan was announced by new Prime Minister Liz Truss last week amid growing concerns about the impact of expected bill increases.
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Up to 15% of households are on flat rates, many stuck at prices higher than the current cap amid previous forecasts that it could reach £7,263 next year.
Many of these customers may have paid a much higher tariff for their energy than if they had stayed on a standard variable tariff.
Lewis has now reassured consumers that they will not be forced to pay prices higher than the price guarantee after seeking advice from energy companies.
He tweeted: “Any patches that are more expensive than the new price guarantee rate will see an automatic reduction in October (but will only be reduced at most to the new guarantee level)
“So for now DO NOTHING…”
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He said at an energy summit on Wednesday, major energy providers agreed that households (perhaps 1%) whose repairs still cost more than the price guarantee after that could move to the lower price without exit penalties.
This would last at least until November 15.
He stressed that no time should be “wasted” calling companies because they did not have full information from the government and 99% of repairers had nothing to do anyway.
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Lewis expanded on his advice on the Money Savings Expert website, adding that he understands the discount would only apply to fixes that are more expensive than the price guarantee.
This would mean that households that had a very cheap solution below the guaranteed price would not get a discount.
Lewis suggested that those with mid-tier patches and most high-tier patches would be discounted at the price guarantee, but a few of the high-tier patches could still be more expensive than that rate.
He said that when the fix ends, households should automatically switch to the price guarantee if they don’t choose another option.
Every household in the UK will also receive the government’s non-refundable £400 payment under the Cost of Living Support Scheme, which Rishi Sunak announced while chancellor.
It will apply directly to household energy bills, distributed in monthly installments between October and March.
The government has also confirmed that all other support payments promised for this winter will remain in place.
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