MARTIN Lewis has put his own advice under the microscope and asked: were households right not to get a fixed energy deal last year?
The MoneySavingExpert questioned his own recommendation in a video segment on his website.
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In his latest video he says: “I want to bash out a quick video on whether the advice to do nothing on energy, to stick on the price cap since last October, was correct.”
The bills expert first told households not to get a fixed energy tariff when prices started rising last year.
It was unusual advice, as typically customers on fixed deals have got the cheapest rates.
Martin Lewis said that now, with the benefit of some hindsight, he could decide whether the advice had been correct or not.
Wholesale prices started soaring last summer and in October the energy price cap jumped to a record high of £1,277.
The rise in wholesale costs has seen more than 20 energy providers collapse in recent months as they have struggled to cope.
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Others are passing on the increase to customers in their energy bills.
Fixed energy tariffs are now considerably above the energy price cap – an unprecedented situation.
Households on their provider’s standard variable tariff will see their bills limited at the cap.
Martin said: “Last October, we’d just seen the price cap that the majority of homes are on… go up 12%.
“What was extraordinary is for the first time there were no meaningfully cheaper tariffs, and the cheapest fixes you could lock in, instead of saving you lots of money, you would have to pay a substantial premium for.”
Martin advised households at the time to treat their variable rate as a they would a six-month fixed deal.
He said anyone on the energy price cap would at least know what they were paying until April 1, 2022, when the new cap kicks in.
Will energy bills go up further?
It is feared bills could rise even further when the new energy price cap is announced next week.
This will come into effect in April, and it is widely expected to add hundreds of pounds to household bills.
A second increase in October could push household bills past £2,000.
So should households have secured a fixed deal last year, or were they right to stick with the variable rate?
Martin said that in early October 2021, the cheapest fixed energy deals were around £1,580 a year and had risen to £1,850 by the end of November.
For comparison, the energy price cap is currently £1,277.
He said, based on the expected increase, those who had opted to “do nothing” and stay with the variable tariff, which is limited by the price cap, were “very likely better off”.
He said: “To those few people who would have been better if they’d acted and didn’t because of me, I’m sorry.
“I didn’t know, I couldn’t know. I tried to do everything right, but I can’t promise the right answers.”
He added that staying on the price cap was still the right thing for “most people”.
Martin said he would not advise taking a fixed deal now unless you can get one that is no more than around 40% above the current price cap.
He said: “I find it very difficult to say to people to give up a £1,277 a year rate, knowing you’re going to £1,900 a year, to lock in at £2,000.”
Elsewhere, we have answered all your energy bill questions.
Customers whose energy firm has collapsed are being urged to check they aren’t being charged twice.
And we look at what you should do if your energy provider goes bust.
Martin Lewis almost in tears after being unable to help mum with energy bills
This post first appeared on thesun.co.uk
