Martin Lewis on energy bills as Ofgem price cap falls

The Money Saving Expert was reacting to the move from Ofgem, which will see the price an average household will pay for energy drop by 12.3 per cent in April.

The £238 fall over the year equates to around £20 saved each month for the average household in England, Scotland and Wales.

The cap does not set the maximum a household will pay for their energy but limits the amount providers can charge them per unit of gas or electricity, so those who use more energy will pay more.

Taking to X, formerly known as Twitter, to discuss the latest energy price cap, Martin Lewis said: “The new rates for April 1 have just been announced. In a nutshell, for every £100 a Direct Debit user spends on energy today, they’ll pay £87.70 for it from April 1.

“So it’s an improvement, and predictions are it’ll drop again in July, though overall prices are still too expensive, nearly double the price of the cheapest pre-crisis.”

He also shared his “quick need-to-knows” including revealing that prepayment meters will become the cheapest way to pay for energy.

The Money Saving Expert said: “Prepay standing charges have been lowered to equalise them with Direct Debit, yet as prepay unit rates are cheaper, that means overall for a typical user from April, prepay will be about 3 per cent cheaper.

“Prepay, which many of the most vulnerable use, was always the rip off, so this is a staggering turn around. And this is unlikely to be a flash in the pan – this pricing structure is likely to continue for the foreseeable future. (To be fair even on the current Price Cap prepay is fractionally cheaper, but that is due to a small Govt subsidy. On 1 April the gap will grow, and all due to real pricing).”

However, he also issued a warning to those considering switching to prepayment meters, saying he suspects Direct Debit will “stay by far the overall cheapest for people who switch”.

Martin explained: “So if you’re on the Cap, moving to prepayment will see a saving. Yet before you jump to it, a word of caution… if and when proper competition returns there are rarely any prepay deals.

“All the big money and discounts are thrown out to win new Direct Debit customers. So I strongly suspect Direct Debit will stay by far the overall cheapest for people who switch, but for those who don’t, it’ll be prepay.”