Important: Martin's energy bill update
'I promised to let you know when it was time to fix energy. Well, for many (not all) that's today - as for the first time in 2022, there are fixes that most should consider' 

The UK energy market is broken. The theory is we're meant to gain from competition, but there hasn't been any, instead we have effectively regulatory-enforced high prices.

This week though, it may be time for action, though it's nowt to whoop about. It's happened because the latest analysis is the future looks even WORSE, with the price cap likely to rise even more than we previously thought. This means some costly fixes look like they may now be winners. Let me talk you through it.

Important: The info below doesn't really apply to those on prepay meters or in Northern Ireland, I'm afraid. 

1. The new prediction is the energy price cap will rise 46% in October (to £2,880/year for someone on typical use)

The energy price cap limits what firms can charge in England, Scotland & Wales for their default standard variable tariffs. It currently changes every six months, though that'll soon be every three. The vast majority of homes, over 70%, are now on it - pretty much everyone who isn't on a fix.

You're on it if you've never switched tariff, if your cheap fix ended and you did nothing, or if your firm went bust last year and you were moved elsewhere (and haven't switched again).

The price cap is misnamed though: there's no maximum amount you'll pay. What's actually capped are electricity & gas standing charges and unit rates (the link shows the current ones). Here's the latest intelligence on how it'll move. I warn you - it's grim reading.

I'm basing my workings below on Cornwall Insight's predictions - it has a strong track record and it's October forecast is more recent than Ofgem's.

I know many want to know Oct's predicted unit rates and standing charges, but that's unreadable, as it depends on how Ofgem chooses to split the increase between them (I'm lobbying for a reduced standing charge).

2. There are NO tariffs meaningfully cheaper than the current price cap

Before the energy world changed last October, I always said the price cap rate was pants, so switch to something cheaper. Today there are no tariffs meaningfully cheaper than the current price cap. So none of this is about switching somewhere cheaper than now...

3. Yet there ARE fixes cheaper than the predicted October cap, including for the first time an 'open market' fix

So let's get to the nub of this. This is about whether there's a deal likely to be cheaper than the price cap if we look over the next year. For that, clearly there need to be fixes you can lock into that are cheaper than the expected October price cap. And there are.

So if we factor in four months on the current rate, three at Oct's, three at Jan's and two at April's and adjust for higher use in the winter, if the predictions are right, on average you'll pay 35% more over the next year than you do now. Of course, some of this is crystal-ball gazing and averaging, but overall my best guess, as a rule of thumb, is...

If you're offered a year's fix at no more than 35% above your current price-capped tariff, or 40% more if you very strongly value budgeting certainty, it's worth considering.

This isn't an exact science - do watch my video explainer from a couple of months ago if you want to understand more. The rates have changed but the principle is the same.

4. Most fixes worth considering are 'existing customer only', but for the first time there's an 'open market' deal too

Today isn't the first day there've been tariffs worth looking at recently, yet until now most have been 'existing customers only', so you could only do it if you were with the right firm.

This week though, the cheapest open-market tariff, which anyone on direct debit can switch to, just scrapes into the equation. It's pricier though, so it's only for those who really want price certainty or are desperate to leave their existing provider.

So check the list below, first to see if your own firm has a cheaper existing-customer deal, then, if not, consider the switchers' tariff. Do be aware though firms needn't publish details of existing-customer tariffs, nor offer them to all customers, which makes life difficult both to get them, and for us to assess them (let us know if you spot one we've missed).

- How do I get an existing-customer fix? Call your firm, use its web chat service or check in your online account to see if you can get it, especially if you've already been offered the tariff via its marketing. Do ensure it's the same tariff though, as there can be many with similar names.

- Factor in early exit penalties. These can now be very hefty with some firms. Which means if things did change, you can't easily escape.

- Always check your OWN price rise. Sadly, as firms needn't publish existing-customer tariff rates, we have to assess based on average use. So the percentages above are inexact - always ask how much more than the price cap it'll cost in your specific case. Remember 35% is the key figure (or 40% if you really value price certainty).

5. I can't decide if fixing is right - help 

See this as a way you may be able to squeeze a little bit off your bills over the next year, and get some price certainty. But unless you're with one of the firms that'll give you one of the cheapest existing-customer fixes, it's certainly not a slam dunk. And remember there are a lot of 'ifs' and 'buts' here. So...

If you want price certainty, the cheapest fixes now give you that, but you'll pay more in the short term. If in doubt though, there's nowt wrong with playing safe and sticking on the price cap. 

And it should be noted, if wholesale rates drop then cheaper fixes could be available in future, so by locking in now you miss out. Though Ofgem has put a 'market stabilisation' charge in place which means if that does happen, outrageously the new firm must pay the old firm, which I think will mean vastly cheaper deals are unlikely over the next year.

6. 'I'm on a fix now, and it's ending soon, what do I do?'

The likelihood is your current fix is far cheaper than anything else available, so stay on it as long as you can. When it does end by default you'll be moved to a price-capped tariff, so the logic of whether to fix or not then is the same as above.

The only difference is timing. The further away your fix is from ending, the less time you'd have on the current cheaper price cap rate. So that means it would be worth fixing at a slightly higher percentage than the one above.

7. Energy price hikes will be hell for many. If you're already struggling to pay, some help may be available... 

The Government has announced a new energy bill support package worth at least £400 to almost all households and over £1,000 to some. This will apply regardless of whether you are on a price-capped tariff or if you fix. See my Q&A with Chancellor Rishi Sunak on the key measures.

Yet there are still many who are finding, and will find, paying energy bills desperately difficult. Our What to do if you're struggling to pay your energy bills guide covers everything you can do and where to get help, and has info on all the new cost of living support schemes.