Personal fianance expert took to Youtube to explain how people could get £300 back
Personal finance expert Martin Lewis has given an important message to all customers of UK power suppliers such as Octopus Energy, OVO Energy, British Gas, EDF Energy, and ScottishPower. The ITV and BBC guru said that it was for anyone who pays by direct debit – so about 60 per cent of customers – need to make a check as it’s the ‘perfect time’.
It is estimated that in 2026 so far about 16 million households have built up credit in their energy accounts (57% of households), which typically indicates they are paying by direct debit. Mr Lewis said that this time of year is the best to check if there are fund which you can withdraw – if you do it at the wrong time it could lead to you having to increase payments to cover times when you use more power.
However May is the time to do it, he said: “If you pay your energy bills by monthly direct debit, this is the perfect time to check whether you are in too much credit. Energy firms are sitting on over £3 billion of our cash and you can get it back.
“So why right now? Well, at the beginning of the May, we are at the bottom of the curve in the energy direct debit cycle. That means this is the point of the year when you should have the minimum amount of credit. So go and have a look what credit you’re in.“
There is one task which homeowners need to do first: “Make sure you’ve done an up-to-date meter reading or you’ve got a smart meter doing that for you and that’s been factored in. Then assuming your direct debit is about right, what I would suggest if you have any more than a month and a half’s worth of direct debits, that’s too much.”
If people have about 6 weeks worth of payments in their account, now’s the time to get it out: ““So suppose your direct debit is £200 a month. If you got £600, a month and a half worth is £300 quid. So I would be getting in touch with them saying, ‘Why am I so much in credit? Please can you give me back the £300 of my money that you’re sitting on?’.”
Recently Mr Lewis called on customers on ‘price cap’ tariffs to take a fix. The energy price cap, set by Ofgem every three months (January, April, July, October), limits the maximum unit rates and standing charges suppliers can charge for default, standard variable tariffs in England, Scotland, and Wales. It is not a total cap on bills; the more you use, the more you pay. It applies to households on default tariffs.
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Mr Lewis, speaking on ITV show This Morning, said that if people aren’t sure if they’re on the price cap or not – it means they almost certainly haven’t fixed their energy contract – and they need to take action. He said: “I was shocked that so few people knew they were on the price cap because we use this term all of the time. And I often say, if you’re on the price cap, get off the pants price cap. It’s a pants cap. But I actually don’t think people know.
“So, let’s be very plain. The price cap applies to firms standard variable tariff. That’s the default tariff. That’s the ‘you’ve not chosen a tariff’ tariff. That’s the I’ve not done anything when my fix ended tariff. It’s the do nothing tariff. That’s the price cap. If you’ve chosen to fix, if you’ve chosen a specialist tariff and you’re still within that, you’re not on the price cap. So, we are talking all those of you.”
Martin explained prices went down 6.7% in on April 1 and the price cap moves every 3 months. He sid: “What it does is it caps the unit rate and standing charge that energy firms can charge. Now, here’s the thing you need to understand. The price cap is set based on a time lag. So, the April price cap was based on wholesale rates. That’s the worldwide rates if you like between middle of November and the middle of February.
“The July price cap is based from the middle of February till the middle of May. It contains all of the Middle East conflict, and prices were two thirds of the way through it have been very high. So that means the current prediction is we’re likely to see a rise on the 1st of July of between 12 and 14% in the energy price gap.”
Mr Lewis said that the cap is only in place for three months with the next update in October. However he said that current predictions are still that the October price cap will be roughly the same ‘as once it’s gone up 12% it’s going to stay around there but we don’t know. That’s crystal ball gazing.’
He explained: “So that’s the position that we are currently in. But the rate that you can get switchable tariffs on the market like cheap fixes that isn’t based on a time lag. That’s based on current prices right here, right now. So sometimes the time lag is good for you. Sometimes the time lag’s bad. Now since we had the ceasefire, worldwide natural gas prices that also dictate our electricity prices have dropped.
“They’re not cheap, but they’ve dropped. So two weeks ago, you could not get a fix that was cheaper than the current price cap. It was about 7% more expensive. Right now, the cheapest fix is 6% less than the current price cap. And with a fix, you lock in your rate. So, you can get a fix now at 6% less than the April price cap. And we’re pretty sure that that price cap is going up in July. So, and this fixes don’t move. And then it might come down afterwards. We’re not sure. But even if it does, probably won’t get up.”
