The reduction for fixed tariffs is equivalent to a 7-9% typical fall on existing fixes from April 1, according to Martin Lewis. The cut will be passed onto customers by reducing unit rates for gas and electricity, equivalent to £117 a year on typical use. The April price cap fall is locked in and will not change, he added.
However, energy prices are set to rise significantly from July due to the ongoing war in Iran pushing up wholesale energy prices. Forecasts from Cornwall Insight analysts suggest prices could rise by as much as 18% on the Ofgem price cap in July. According to Lewis, the impact of the spike on the price cap will only be from July.
He emphasized that the July cap is based on an assessment over three months, and the spike will push that average up, but key unknowns remain about how big and prolonged the spike will be, as well as the exact impact of the Iran war on wholesale prices beyond the general increase mentioned. It is also unclear whether all major suppliers have confirmed the implementation details of the April 1 cuts for fixed tariffs, and the specific government policy changes removing charges from bills have not been detailed.