Energy bills: Martin Lewis explains how to save £200 in four easy steps

Martin Lewis has explained how people can save £200 on their energy bills through four simple steps.

The MoneySavingExpert detailed, on his ITV show, an easy way to check if customers think they are overpaying their energy bills on their direct debit - and to see how much they should be charged. He also explained that it is vital to give suppliers regular metre readings, so the price paid on energy bills is not based on estimates.

However, if people still think they’re being overcharged, Mr Lewis suggested using an online direct debit calculator which will work out how much you should be charged based on your energy usage.

When you have worked out how much your energy bills should cost, Mr Lewis advised then to "politely" call your supplier and question the charge - which could lead to a bill reduction. He said, in his experience, the calculator results have been "very powerful" in getting bills down.

If, after this, you still think you’re overpaying, ask your supplier to move you onto a direct debit where you pay what you use.

This eliminates the "smoothing effect" - where bills stay roughly similar all year round, rather than seeing people pay more in the winter, but less in the summer.

Mr Lewis did warn against paying when you receive your bill each month, as that can be up to 10% more expensive. One viewer emailed the show to say that his mother saw her bills reduced by £207, from over £500 per month to just over £300 based on the figures from the online calculator.

Will gas prices continue to rise?

Mr Lewis looked at why energy bills continue to rise even though wholesale gas prices fall. One audience member asked if energy prices will drop as the wholesale price of gas has started to drop.

The wholesale price of gas rose due to different factors, including the war in Ukraine. Mr Lewis explained that the wholesale price of gas is four times more than what they were back in 2021 - where per therm (the unit of measurement gas is sold in) was 50p but is now £2.

Mr Lewis explained that for energy bill rises to slow the energy price cap needs to go to a rate that is lower than the energy price guarantee. He explained: “We have the energy price cap, which is what the regulators set based on wholesale prices and a little bit of profit for energy firms, and it was going up and up and up.

Then, in October, the government said: ‘From this point on the state is going to subsidise energy prices.’

“Actually a lot of it is now paid by the state – everybody’s energy bills, rich or poor, are reduced because of a state subsidy. In October the price cap was due to go up 80%. The actual price we paid went up 27% because we got moved on to the new energy price guarantee, which is the state-subsidised amount, if not would be on the higher amount.”

Mr Lewis pointed at the graph in the show, saying January’s figure came higher meaning the subsidy is now bigger. He said: “What we have been told is from April the energy price guarantee is going up 20%. So whatever rate you are paying now will have a fifth on top. And that’s what you’ll be charged for April and next winter unless the energy price cap goes lower than the energy price guarantee.”