Martin Lewis: Octopus Energy customers should consider fixed tariffs as price cap is set to rise again

Martin Lewis has warned that fixed tariffs could be cheaper than the next predicted energy price cap.

Money Saving Expert, Martin Lewis, has advised Octopus Energy customers to look into fixed-rate energy tariffs, as it may work out cheaper with energy bills soaring.

In a few weeks, the average energy price cap is expected to rise 65% from the current £1,971 to £3,582.

The average annual bill is expected to rise to £3,582, which works out to be around £355 a month, compared to the current average of £164 a month.

And consultancy firm Auxilione has now estimated the price cap could hit £5,456 in January.

Personal finance expert Martin Lewis has called on Octopus Energy customers to look into fixed-rate tariffs.

This is a contracted rate paid per unit of energy and will be set for an agreed amount of time, which is usually around 18 months.

Lewis said that as energy regulator, Ofgem, increases the limit a supplier can charge for each unit of gas and electricity in October 2022, a fixed tariff may save households more money in the long run.

A homeowner turning down the temperature of a gas boiler. Photo: Andrew Matthews/PA Wire

How to save by setting up a fixed tariff

A fixed-rate tariff can provide households with more assurance that they will be paying the same amount.

Octopus Energy has said it costs the company more £4,000 to buy a year’s worth of energy from the wholesale market, which is why households shouldn’t rule out moving to a fixed tariff.

A spokesman said: “If a customer is looking for security and prefers to know how much they will pay for energy each month for the next year, they may want to fix their prices.

“If a customer prefers to wait to see if energy prices come down again over the next months, they could stay or move onto our SVT, and for example fix it at a later date.”

The standard variable tariff is currently capped at £50 cheaper than the price cap at £1,921, but this may increase.

Writing on the Money Saving Expert website, Mr Lewis said: “The gas and electricity market is in crisis.

“Many are paying double what they were a year ago, and another huge hike is expected in October.

“So understandably the big question I’m being asked is, ‘Should I stick on the price cap, or lock into a fixed energy tariff?’

“If you’re offered a year’s fix at no more than 95% above your current price-capped tariff, or 100% more if you very strongly value budgeting certainty, it’s worth considering.”

What is the Octopus Energy support scheme? 

Octopus Energy recently introduces a financial hardship scheme fun of £6m, for households struggling to pay their energy bills.

A spokesperson said: “We talk to 40,000 customers a day, and we know how hard it is right now for many people.

“We are in frequent dialogue with the government and our regulator Ofgem on how best to address this and are doing all we can to help customers ourselves in the meantime.

“We can offer a number of support options based on circumstances and need, including access to existing schemes, monetary credits from the fund, or personalised account support. We also offer a number of ways to help customers save money in a practical way, including making homes and heating more energy efficient.”

Octopus Assist is open to all customers who need help and can be accessed via an online tool.