Martin Lewis reveals ‘gobsmacking’ hidden detail in price cap announcement that means millions will save money

MARTIN Lewis has shared a “hidden” detail in today’s price cap announcement that reveals millions will save £49 a year.

The consumer champion has given his verdict on the latest figures released by energy regulator Ofgem this morning.

Martin Lewis reveals hidden detail in price cap announcement that means millions will save £49 a year


Martin Lewis reveals hidden detail in price cap announcement that means millions will save £49 a yearCredit: ITV
Ofgem has confirmed the unit prices for energy customers from April


Ofgem has confirmed the unit prices for energy customers from April

The energy price cap will fall from the current rate of £1,928 to £1,690 a year from April 1.

It means the average household could see their annual bill drop by £238 – but bear in mind the cap is reviewed every three months, so this is just based on current estimates.

Plus this is just an average, what you pay will depend on how much you use.

As part of the publication Ofgem also announced a host of other changes, including that those on prepayment meters will not pay more than those who pay bills by direct debit.

This means that people who pay for their energy using a prepayment meter will pay the same standing charge as those who pay by direct debit.

Speaking on Good Morning Britain this morning, Martin revealed that this means “prepay will become the cheapest way to pay”.

He said: “This is the big change, hidden under the figures.

“For the first time, prepayment will properly be the cheapest way to pay.

“They have equalised the standing charges on prepayment and direct debit, and unit rates on prepayment are cheaper.

“So, from April 1 if you are on the price cap, which is the vast majority of homes, then prepayment will be typically 3% cheaper than paying by direct debit.”

Many, including The Sun, have been calling for unfair prepayment costs to be axed for several years due to some of the country’s most vulnerable being saddled with high prices.

Those who used “pay as you go” gas and electric paid up to £45 more than those who were billed and paid by direct debit.

Martin said after many years of lobbying, the fact that prepayment is going to be cheaper is “absolutely gobsmacking”.

It’s worth bearing in mind that paying via prepayment meter is slightly cheaper at the moment anyway, but this is due to a government subsidy brought in last year.

But, as Martin pointed out, from April it will be cheaper because of real pricing set out by Ofgem and it will be permanent.

Announcing the change this morning, the regulator explained that the solution must be funded by bill-payers rather than taxpayers, “to maintain fairness”.

This means that prepayment customers who get their electricity and gas from the same supplier will save around £49 per year while direct debit customers will pay £10 more each year.

Do note though that how much you pay will depend on your usage and can vary by region.

‘It’s a no brainer’, says Martin Lewis as he reveals ‘easy win’ way to slash energy bills with swap

Does this mean you should switch?

Martin went on to explain to viewers that while many will be thinking that this means they should switch to prepayment, he advised caution.

He said: “I’m talking about the cost of prepayment on the price cap – if and when market competition comes back, most of the cheapest deals are for direct debit.”

“So I suspect the pattern we’re going to have in the future is if you’re a switcher who moves tariffs you should be on direct debit because that’s where the cheapest deals come and you will make the biggest savings.

“If you’re not going to switch, perversely from what we’ve been saying for the past 10 to 15 years, prepayment meters are now going to be the cheapest route for you.”

Essentially, paying by direct debit will continue to be the cheapest way to pay overall for people who switch, but for those who don’t switch, it’ll be prepayment.

Martin added that it’s “quite staggering” and that he thinks it seems to have gone unnoticed in Ofgem’s announcements.

Ben Gallizzi, energy expert at, agreed that while it may work out cheaper, changing to prepay can come with drawbacks.

He explained: “With prepayment meters, you pay for your energy before you use it, meaning it is possible to run out if you have not put enough money into your account.”

According to Citizens Advice, 800,000 went without gas or electricity for longer than 24 hours last year and 1.7million people were disconnected at least once a month.

Moving to a prepayment meter involves a big change in how you pay for energy, as it requires manual top-ups, which could involve topping up at a shop or via an app.

This is compared to direct debit arrangements which mean you pay the same amount every month throughout the year based on your estimated energy use, and they take into account higher usage in the winter and lower usage in the summer.

With a prepayment meter, your energy costs will be higher in the winter months because of the cost of heating — and this will have to be paid for upfront, which could make it more difficult to budget for in advance, Ben added.

He also said: “Anyone thinking of moving to a prepayment meter should note that it also involves having a smart meter installed.”

How do I calculate my energy bill?

BELOW we reveal how you can calculate your own energy bill.

To calculate how much you pay for your energy bill, you must find out your unit rate for gas and electricity and the standing charge for each fuel type.

The unit rate will usually be shown on your bill in p/kWh.The standing charge is a daily charge that is paid 365 days of the year – irrespective of whether or not you use any gas or electricity.

You will then need to note down your own annual energy usage from a previous bill.

Once you have these details, you can work out your gas and electricity costs separately.

Multiply your usage in kWh by the unit rate cost in p/kWh for the corresponding fuel type – this will give you your usage costs.

You’ll then need to multiply each standing charge by 365 and add this figure to the totals for your usage – this will then give you your annual costs.

Divide this figure by 12, and you’ll be able to determine how much you should expect to pay each month from April 1.

How can I get help with my bills?

Households should check whether they qualify for energy support schemes or grants.

The government runs the Warm Home Discount scheme, which provides £150 in energy credit to help with bills during the Winter and has recently introduced the Great British Insulation Scheme.

Councils also offer the Household Support Fund.

Many suppliers have customer support funds offering home insulation, energy-efficient white goods and cash grants.

Here’s a list of schemes open right now:

  • British Gas Energy Trust Individuals and Family Fund
  • British Gas Energy Trust
  • EDF Customer Support Fund
  • E.ON and E.ON Next Grants
  • Octopus Energy Assist Fund
  • OVO Energy
  • Scottish Power Hardship Fund

If you’re worried about bills, these freebies could help you to keep costs down.

Do you have a money problem that needs sorting? Get in touch by emailing

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