Some new energy deals could be coming out soon
Martin Lewis has provided an update regarding an approaching change to energy bill tariffs. He discussed some important market developments which will likely affect both gas and electricity charges.
Writing on social media on June 15, Mr Lewis had some observations to share following the US and Iran signing a peace agreement. He posted a chart from Trading Economics, which displayed fluctuations in the cost of ‘Natural Gas UK’, including a recent decline in the price. Mr Lewis said: “The US and Iran signing a framework deal has pushed natural gas prices down. These wholesale prices are a key driver of UK gas and electricity bills.
“As the six-month graph shows, though, prices still have a long way to fall before returning to pre-conflict levels.” He said that the price reduction could influence the offers available for bill payers.
‘Significantly higher’
Mr Lewis explained: “The good news is that this could lead to slightly cheaper fixed tariffs being launched in the coming days. However, without substantial further drops, the October price cap still looks likely to be significantly higher than it is today.”
One person responded to this alert, arguing that this chart doesn’t represent the genuine prices consumers actually pay. They told Mr Lewis: “This affects the paper prices of gas and oil. Not even close to actual prices that actually get paid.”
To which the consumer champion responded: “Yes and no. It is the main ‘change’ dynamic. The overall price is dictated primarily by policy costs, but the movement in prices is dictated by wholesale costs.”
He responded to another message, saying that fixed rate deals on offer are “likely to get cheaper if this holds”. For the October price cap calculation, Ofgem uses an assessment period from May 29 to August 18, so some of the recent weeks’ high prices will be considered in the regulator’s decision and where it sets the October price cap.
The price cap is set to rise by 13 per cent from July 1. This means an increase of approximately £18 a month for the average household paying for dual fuel by direct debit.
Analysts had previously forecasted that the price cap would rise again by 2 per cent or 3 per cent in October, and remain at this level in January. Discussing these predictions on his BBC podcast recently, Mr Lewis stated: “If you are on the price cap, the default tariff, you are going to likely pay substantially more than now until at least next March.”
