Martin Lewis’ new ‘magic number’ predicts when to correct energy bills to save money

Martin Lewis, founder of MoneySavingExpert.com, spoke about price caps and energy tariffs in his latest video update as the cost of living continues to rise

Video is loading

Video not available

The video will start playing automatically soon8thCancel

Play Now

Martin Lewis issues new advice on fixed energy tariffs

Martin Lewis has offered fresh advice on whether or not people should set their energy tariff now or stick to the variable price cap tariff.

The 49-year-old money guru said people suffered a huge 54% hike in the price cap on April 1, which will last until October, when it’s likely to climb back up.

In a video posted online, the financial journalist said “timing is key” as things change regularly.

Martin added: “The current price cap for someone who is dual fuel, which is typical use, is £1,971 per year.

“That went up massively on April 1st and that’s where it’s sitting now. That’ll last until early October.”

The October price cap is based on wholesale prices paid by energy companies between early February and late July, reports Yorkshire Live.

The Brits are currently halfway through that time so Martin has predicted what will happen this year.

Using Cornwall Insight for its research, the broadcaster thinks there will be a further 32% increase.

He said this will bring the price ceiling to around £2,600 for someone with typical use.

“As we are in the middle of the reporting period, there is a very small chance that prices will fall in October,” the money guru continued.

“If you can find a solution that’s no more than 17% higher than what you’re currently paying for the price cap, then it’s worth doing.

“Nonetheless, I think a fix has the benefit of price certainty, it’s effectively a cap in its own right, but the cap lasts longer.”

Cornwall Insight suggests that next April we will see a 12% drop from the October price cap.

Martin, who founded MoneySavingExpert.com, said: “I would suggest as a rough rule of thumb, although the math shows 17% if you find a solution that is no more than 25% higher than the current price cap and you value price certainty it is probably worth setting that price.

“Let’s take a look at what’s out there at the moment. The fixes that are worthwhile are likely to be short-term fixes from your current supplier, which are cheaper than over-the-counter changes.

“The problem is that they are not released at a free market price. I can not see you. The cheapest I can find today is 35 percent – so it’s probably not worth it. So I think 25 percent is the magic number.”