Martin Lewis reveals ‘cheapest way to pay’ your energy bills following latest cap

Martin Lewis has revealed the cheapest way to pay your energy bills following the latest price cap change coming in April.

Ofgem, which regulates the energy sector across England, Scotland and Wales, revealed today (23 February) that the energy price cap will be cut by hundreds in spring.

Hoorah, finally a glimmer of good news.

There's been a whopping 12.3 percent drop in the price cap, which is the lowest since two years ago when we were hit by sky rocketing prices.

At present, the cap is set at £1,928 a year, but this will change to £1,690 a year come April.

This means typical households will save £238 over the course of a year.

It doesn't sound like huge amounts, but it's a massive step in the right direction, especially since the worst days of the cost of living crisis.

When the change comes on April 1, average households will be £690 a year better off than when prices were at their worst.

And with that in mind, financial guru Martin Lewis has revealed the best way to pay for your energy.

ITV

Surprisingly, prepay will become the cheapest way to pay.

"Prepay, which many of the most vulnerable use, was always the rip off, so this is a staggering turn around," Martin said on X.

"And this is unlikely to be a flash in the pan - this pricing structure is likely to continue for the foreseeable future."

Martin also had a warning for those who plan on moving to prepay.

"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," he added.

"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."

Richard Newstead/Getty Images

Speaking about the upcoming change, Ofgem chief executive Jonathan Brearley said: “This is good news to see the price cap drop to its lowest level in more than two years – and to see energy bills for the average household drop by £690 since the peak of the crisis – but there are still big issues that we must tackle head-on to ensure we build a system that’s more resilient for the long term and fairer to customers.

“That’s why we are levelising standing charges to end the inequity of people with prepayment meters, many of whom are vulnerable and struggling, being charged more up-front for their energy than other customers.

“We also need to address the risk posed by stubbornly high levels of debt in the system, so we must introduce a temporary payment to help prevent an unsustainable situation leading to higher bills in the future.

"We’ll be stepping back to look at issues surrounding debt and affordability across market for struggling consumers, which we’ll be announcing soon."