Martin Lewis, the MoneySavingExpert, has been advising consumers to reconsider fixed energy tariffs after a long period where staying on the variable Price Cap was almost universally the cheapest option. His change in advice signals a significant shift in the energy market.
Here’s a breakdown of why you might consider fixing your energy tariff now, based on Martin Lewis’s insights:
### Why Consider Fixing Your Energy Tariff Now?
1. **The Price Cap is Falling (but potentially not for long):**
* The energy Price Cap is set to fall significantly again in July 2024. This will make variable tariffs cheaper for a period.
* However, industry predictions (including those from Ofgem and analysts like Cornwall Insight) suggest the cap might then either **stabilise or begin to rise again** later in the year, particularly towards the crucial winter period (October onwards).
* Fixing now allows you to lock in a rate that might be competitive with, or even lower than, what the cap could rise to in the future.
2. **Suppliers are Offering More Competitive Fixed Deals:**
* For a long time, fixed deals were significantly more expensive than the Price Cap because suppliers had to price in massive wholesale price volatility.
* With wholesale prices having fallen and stabilised somewhat, suppliers are now starting to offer **fixed tariffs that are close to, or even slightly below, the upcoming July Price Cap.** This is a crucial indicator that suppliers believe future wholesale prices might not fall much further, or could even rise.
* When fixed deals become competitive, it’s often a good time to consider them, as it shows market confidence.
3. **Certainty and Budgeting:**
* This is often the primary reason people fix. A fixed tariff gives you **predictable unit rates and standing charges** for the duration of the fixed term (e.g., 12 or 18 months).
* This predictability makes it much easier to budget and manage your household finances, without the worry of sudden price increases.
4. **Protecting Against Future Rises:**
* While the July cap will be lower, there’s no guarantee the cap won’t increase in subsequent quarters (October, January). If you fix now at a rate that’s close to the July cap, you protect yourself against potential increases later in the year.
### Martin Lewis’s Rule of Thumb:
Martin Lewis often provides a percentage guideline:
* He generally suggests that if a fixed deal is **around 5% (or potentially up to 10% for high certainty seekers) more expensive** than the *current* Price Cap, it’s worth considering for the peace of mind it offers against future rises.
* Crucially, if a fixed deal is **less than the *expected* Price Cap for the *next* quarter (July-September)**, then it becomes an even stronger contender and is often a “no-brainer” for many, as you’re immediately saving money *and* gaining stability.
### What to Consider Before Fixing:
* **Compare Carefully:** Always use an Ofgem-accredited comparison site to see what fixed deals are available from *all* suppliers, not just your current one.
* **Check Exit Fees:** Most fixed tariffs have exit fees. Understand these in case a much better deal comes along later, or your circumstances change.
* **Your Risk Appetite:** Are you comfortable riding the waves of the Price Cap, or do you value the security of a fixed price more?
* **Wholesale Price Forecasts:** Keep an eye on reputable forecasts for future Price Cap predictions (e.g., Cornwall Insight, Ofgem).
In summary, the energy market has entered a phase where fixed tariffs are becoming genuinely competitive again. Martin Lewis’s advice to reconsider them reflects this shift, offering consumers a chance to lock in stability and potentially save money compared to future variable tariff fluctuations.
