Last week, Prime Minister Liz Truss confirmed that energy bills will be capped at £2,500 next month. This will be implemented from October 1, the same day Ofgem was set to raise the energy price cap to £3,549 for those on typical use. However, those on fixed tariffs with their supplier were left unsure of how they would be affected by this latest Government intervention.
This is because many households have already negotiated or agreed to a fixed rate with their energy company.
As a result, many Britons were concerned they would have to pay more than this subsidised rate issued by the Government.
Following a meeting with the UK’s biggest energy suppliers, financial journalist Martin Lewis is offering advice to those on fixed tariffs following last week’s energy price guarantee announcement.
This summit was attended by the CEOs of companies such as EDF, Shell and Octopus Energy.
On Twitter, Mr Lewis said: “All fixes that are more expensive than the new price guarantee rate will see an automatic reduction in October.
“But they will at most only reduce to the level of the new guarantee. So for now do nothing.
“In the energy summit I had today, BG, Shell, Eon, EDF, Ovo (SSE), Octopus CEOs agreed to my ask that the few (maybe one percent) whose fixes still cost over the price guarantee after that, can move onto the guarantee with no exit penalties, til at least November 15 (some beyond).
“Yet firms don’t have full info from the Government yet, so don’t waste time calling them now (and 99 percent of fixers needn’t do anything anyway).”
Yesterday, Mr Lewis tweeted that he was looking to get more “clarification” for how those on fixed tariffs will be affected by the Government’s latest wave of energy bill support.
He added: “They (the rates) will also likely be a few percent higher for those who use prepay or pay on receipt of bills.
“Fixes that cost more than the new price guarantee will also likely see their rates reduced.
“But we are still waiting for clarification on how and what happens to those on cheaper fixes.”
What is the energy price guarantee?
As part of the Government’s latest support, the average household will not pay more than £2,500 towards their energy bills.
It should be noted that this guarantee is a maximum price per unit of electricity and gas which those whose energy usage is more than average will see higher bills.
Yesterday, the direct debit rates for the energy price guarantee for October 1 were announced.
Next month, the electricity unit rate will be at 34.00p per kWh and the gas unit rate at 10.30p per kWh.
This means that the standing charges for both will be 46.36p per day and 28.49p per day, respectively.
However, these figures are just the average with payment rates being dependent on region.
On top of this, these rates only apply to households which are on default standard tariffs, which make up 85 percent of homes.
As a result, those on fixed tariffs are looking for further clarity on how the energy price guarantee will specifically impact their bills.