Energy Question Time: Is it time to fix? (spoiler: YES!) How do I get my credit back? Are Smart Meters… not?

0:00Hello and welcome to the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. And this is an Energy Question Time special in which I answer your questions about absolutely anything you want as long as it's about home energy bills. And we're doing this as the energy price cap that dictates the bills two-thirds of homes in England, Scotland and Wales pay has just gone up by 2 % and it's predicted to stay high for the next year. In this week's Question Time, I'll try and answer your questions on Should I fix? Spoiler, yes. Get off the pants cap. Why are so many smart meters broken?

0:40Should I claim back my energy credit? I've got£1 ,000. That seems far too large. I'm a low energy user. Should I wait to do anything until January because the new low standing charge tariffs come in then? Are there special tariffs where solar panel users can save? Spoiler, yes. Can you fix if you're on a prepayment meter? Spoiler, yes, some can. And loads more. Play the theme tune.

1:21Now, as this is a Question Time special, it's not me who dictates what's coming in, it's he who must be obeyed, podcast producer Matt. Matt, have you had a good week, Matt? I have. I've been in Portugal. Oh, very nice. For pleasure or for work? Just for pleasure. Just for a bit of sun. How lovely for you. Are you all tanned? We're not in the same place. I can't see you. I don't really tan. I have caught the sun slightly. Let's say that. OK, and of course, the sun is something that helps warm our homes, but it's not the only thing that helps warm our homes. I mean, brilliant. Professional broadcasting at its best.

1:52Shall we just get on with the questions? Let's do it. right martin first caller i've got for you gavin is in kidderminster hi gavin hi good morning gavin what's your question yeah well i'm just about to come off a fixed rate uh in a couple of weeks uh of my energies energy bill and um i didn't i don't know really what the best thing to do whether it's to go on another fixed uh or not so yeah that was my question short answer or long answer The best answer. Short answer, yes, of course, go on another fix. The long answer. Strap yourselves in, everybody, because this is what I'm going to use to explain the big picture at the moment.

2:30Tariffs fall into two categories, two big categories at the high level. You're either on a price cap tariff or you're not. So, those people who have never switched, you are on a price cap tariff. Those people who are on a fix or who are on a special deal, you are not on a price cap tariff. But if you are on a fix like Gavin here, once your fix ends, if you do nothing, you are automatically moved onto a price cap tariff. So what is a price cap tariff? Very simple. It is your company's default standard tariff and the amount that they can charge on the standing charges, the daily charge you pay each day for having the facility of gasoline electricity, and the unit rate, how much you pay for each unit of gasoline electricity that you use, is set.

3:19There is a set maximum under the price cap. It's actually regionalised and based on the way that you pay, but there is a set maximum. That is what has just gone up. I'm recording this on the Wednesday. It's gone up 2 % today because the price cap changes every three months. So, Gavin, if you do nothing, you will be on the price cap. The price cap, putting it plainly, is a pants cap. It was originally set up as a default backstop for the people who do not engage in the switching process. The problem we have now since the energy crisis is it has become a default tariff for many people. Two thirds of homes in England, Scotland and Wales are on the price cap tariff.

4:03Originally, it was only ever thought it'd be about 20%, you know, the people who didn't ever engage in the switching market. It's way too many people and people need to get off it. So if we just go through what's happening right now, the price cap is going up about 2 % now. We are already nearly halfway through the assessment period for the new price cap in January. And when you factor all that in, that is roughly predicted to stay where it is right now. It's not going to move very much. I mean, they're predicting it's going down half a percent, but let's ignore that. It's going to stay roughly where it is on the October price cap.

4:41So that's a pretty sure prediction. It would take a monumental move in the underlying wholesale rates, the gas and electricity rates that energy retailers pay, in order for that price cap in January to be a long way away from the October price cap. So we now know roughly where the price cap is going to be until the end of March. And it's going to be high. And that's the high use winter period. Currently, the predictions are afterwards it's going to get even higher, but that's much more crystal ball gazing. So what we have to do is compare that to the cheapest fix on the market. And this is the no-brainer fact.

5:14Cheapest fix on the market is roughly, and it does depend where you live and how much you use, etc., etc., 15 % cheaper than the October price cap. 15%. For someone with typical bills, that's getting on for£300 a year less. So we know the rate of the price cap now until the end of March. And we know what you can fix at, which is 15 % cheaper. and now until the end of March is when you do the bulk of your energy usage over the year so this is the point that being on the cheapest cariff really matters and a fix is 15 % cheaper and the rates are guaranteed for a year and the vast likelihood based on current predictions is that there is no chance of the price cap unless there's some monumental worldwide economic collapse or some other unknown unknown economic factor that's going to bring the price cap down to the level of the cheapest fix within the next year.

6:08And if it were to come down, even then you'd be better off fixing because it would have to come down so substantially after the end of March to make up for the savings that you've had until March that a fix is an absolute no question, no brainer for virtually everyone. And the only people it isn't better for is those for whom there are other specialist tariffs like time of use tariffs or EV tariffs that may be better. So I gave you the short answer. The long answer is still the same. Basically, go onto a whole of market, by default, comparison site, find your cheapest fix and get off that price crap as quickly as you possibly can.

6:44I almost called it a price something else that almost sounds like cap with an R in it. And to be honest, I always use the phrase pants cap. I wish I could call it the price, the other word, but I think I probably couldn't do that in the pod. No, and I'd tell you off for it as well. Profession would tell me off. Does that make sense, mate? No, it does. That's great. Lovely. Thank you, buddy. Cheers, Gavin. Bye-bye.

7:06Okay, question from Adetoro. Any advice for prepaid users? I moved into a new place last year that had a prepaid meter. So far, I love it as I feel I'm in control. Do you have any advice on switching? I can't seem to find anything worth doing on the comparison site or my energy club. OK, so there are virtually never cheap tariffs available for old school prepayment meters, key or card meters. But there are cheaper tariffs available if you are on a smart prepayment meter. I would also say that where, you know, whether you get a smart meter or not, there's lots of debate where it is really important and where smart meters really come into their own is for those on prepayment.

7:51Smart prepayment meters that allow you to top up much more easily, that allow the energy firm to help you if you're having problems much more easily, really are a massive step up from old school prepayment meters. And there are sometimes, nowhere near as many as for direct debit, but there are sometimes, and there are right now, some decent fixes available for those on smart prepayment meters. So the answer to your question is, if you're on a key and card meter, there's very little choice. if you move to a smart prepayment meter then there's much more choice and i think it's more effective and it is worth noting bizarrely these days if you're on the price cap then prepayment meters are actually cheaper than direct debit roughly two or three percent cheaper so while you are disadvantaged by the lack of competition and much cheaper prices, at least within the price cap mechanism, you're actually paying less than those on monthly direct debit.

8:50Next, we have Amanda, another caller. Hi, Amanda. Hi. Hello, Amanda. What is your question, please? Or do you know what, doing that, I found like I was a proper DJ now. I quite like that. I've not been doing... Hello, Amanda. And what's your question? so i'm a low energy user and standing charge is about 60 percent of my bill in winter and in summer and about 25 to 30 percent of my bill in winter so i'm wondering if it's worth fixing now or waiting to see if the changes to standing charge rules will make my bill a bit lower in the future so i think the changes to standing charge rules will make your bill a bit lower.

9:34So for those people who don't know, the regulator Ofgem has announced that from January, all firms must offer a switchable tariff with lower standing charges, not no standing charges. Now, what will happen is they will take some of the costs out of the standing charge and they will add it onto the unit rate. It will be, if we're lucky, a zero-sum game. I say if we're lucky because I think it should have been in the price cap. So therefore, they would have only been able to take off the costs on the standing charge and add them to the unit rate. But as it's not a regulated tariff, they could actually put the unit rate up disproportionately to what they're saving on the standing charge.

10:09I also think it's a massive missed opportunity because I would have done it within the price cap. And then all the vulnerable people who would never switch to this who are lower users could have been automatically switched by default. And I'm quite frustrated because this is based on my original suggestion that they have smothered it in a pillow of bureaucracy. But I will try and clench my buttocks and not talk about that and give you some practical information instead. So just give me a hand so I can get a caption. What are you roughly paying each month in total for your energy bills? About£90.

10:37£90. So yeah, my general guess is people who are paying under around£1 ,200 a year will be better on these new lower standing charge tariffs because the saving on the standing charge will not be disappeared by the increased cost on the unit rate but it will be relatively fine now what we have to do is contrast that by the saving from a cheap fix and we're talking about the end of january so where are we now we've got october november december january you've got four months of the high use period where and remember cheap fixes often have lower standing charges as well because that's how it is all incorporated Here's what I would do.

11:26I, and you'll have to forgive me, this is a guesstimate because those tariffs aren't published. Go on to a comparison and find out how much the cheapest fix is going to save you. Okay. Right. If it's saving you over, my guess would be around, and forgive me for guessing, but it's all I can do. If it's saving you over 10%, 12 % compared to what you're paying now, I would probably go on the cheap fix because this is the crucial period yeah right because this is when you're going to use most yeah and then the fact is that you might be paying more than you would have after January because you're still going to be on a relatively cheap tariff I think will probably you will have still saved more and you won't be paying that much more then so it would probably add up that would be my instinct the one other option you could do that you might find better.

12:22Yeah. There's a tariff called the EDF tracker tariff. Okay. Now, that is basically a price cap, but£50 a year lower standing charges. Just a set discount, you know, instead of the£320, depending on your payment method, you're£270. But the unit rates are exactly the same. So if you wanted to get a lower standing charge tariff now, that is an option for you, the EDF tracker tariff. There are other trackers, but they lower the unit rate. And that's a halfway house. There's no right answer. OK. Does that make sense? Do you understand my logic? Yeah, it makes sense. Yeah, just my supplier offered me a fixed deal that was not really any different to the current price cap.

13:07No, well, that can happen. It's a cheap fix you need, not a normal fix. That's why you need to go on a whole-of-market comparison site and find out. But I can't guarantee at your level of usage the saving will be that big because it depends on the interrelation between the standing charge and the unit rate. But when you go on a comparison, that is all factored in. OK, I'll try that. Thank you very much. All right, I hope that helps. It does, thank you. We've got Ray. He's in Newcastle-under-Lyme. Hello, Ray. Hello, Martin. Hiya, Ray. How are you doing, mate? What can I do for you? Right, it's a bit of a two-part question, actually.

13:40Oh, greedy. Bog off. Bog off question. Go on. Yeah. As a pensioner with sort of modest energy uses, the vast majority of my bill is taken up with a standing charge. I feel as though people who are careful with the usage are sort of being used to subsidise the others. If the standing charge were scrapped and the cost transferred to the unit price, then the more you use, the more you'd actually pay for the service, which sort of seems more fair to me. I've heard a suggestion that standing charges might be reduced a little, but this seems a bit of a halfway house, which might lead to overcompensated unit costs.

14:23OK, well, I've just been talking about that with a prior caller, actually. And you are absolutely right. I have always had an issue with the standing charge. the standing charge has always been set up that for some reason energy companies fixed costs are putting the standing charge and their variable costs are put in the unit rate now there are very few other businesses that work that way um yeah you know i use the example of a pub although the pub industry is struggling at the moment when i go into a pub i don't have to pay a sort of subscription for being a member of the pub each month to cover the pub's fixed costs and the fixed costs that the brewery has and the fixed costs that the glass makers have and then pay an extra on top for my pint.

15:05Not that I drink a pint, to be fair, but if I did drink a pint, and if I bought my pint, all the price and all the fixed cost is in the pint. So it seems to me fundamentally wrong the way that we structure this and have some type of ideological doctrine that all of that price, all of the fixed cost has to be in the standing charge. Interestingly, and I will say this in one of my subtle ways, I suspect that the government agrees with me. I'm going to say I suspect and you'll just have to read what you think about that. I suspect that the government agrees with me. And Ofgem is, in the long term, looking at, for two or three years' time, the entire structure of the way that our energy bills work.

15:46And I think quite a lot of the push of that would be saying, should we really be paying for everything that we're paying on the standing charge on the standing charge? Or should that be moved towards the unit rate? And certainly, if you're in the area of wanting people to use less energy, then the standing charge is a moral hazard. Because once you become a low user like you, then you're disincentivised from cutting your use any further because the savings just don't really add up because it's all in the standing charge anyway. So all of that, I agree with you on. It isn't going to change in the short term.

16:17What's going to happen in the short term is there will be these new lower standing charge tariffs that come out in January where the unit rate will go up commensurately. or, as I've just explained, maybe more than commensurately, which is what I worry about because it's not in the price cap regulations. But you'll have heard me talking about that and you'll know that I'm pretty annoyed about the way that it's been brought in because I think it's killed what could have been the benefit of doing it under the price cap when it would have been regulated pricing and they couldn't have done it another way.

16:46Does that answer part one? It does, Martin, yes. And thank you for your help and concern on all of this. I'm sure there's millions of people who are, you know, thankful for what you do. The second part was, indicatively, my bill per month is about 100 quid, and£80 of that is standing charge. So, as you said earlier, I'm using very little, but still paying quite a big amount percentage-wise. I'm fixed until December, though, with Octopus, And I just wondered whether I might be better sort of looking around now for an alternative deal or waiting until December. So the problem is you would have an early exit penalty if you left.

17:30Yeah. Yeah. But that early exit penalty ends. You can't be charged an early exit penalty within the last 49 days of your fix. So do you know the exact date that your fix ends? I don't know. Do you think it's early or late December? um i i think it's probably about week three of december something like that so we're talking for you the beginning of november yeah so that gives you two choices the first of all is i don't know if your your fix that you've got is cheaper than the fixes available now i suspect not actually because there are some quite cheap fixes available now so you have there is one thing you could do now which is you octopus is one of those firms that generally allows you to move to another fix within its own range without an early exit penalties yeah yeah so you could refix with octopus but you can and if you can find a fix with octopus that's cheaper than your existing fix then that might be worth doing now because what the level that you'll be able to fix that at the beginning of november when you're first free to fix i mean i simply don't know it's a crystal ball to do that yeah yeah yeah i understand that that's that's great advice thank you i'll try that with Octopus now and see what they're offering at the current time.

18:45And thank you for all your advice and your concern for us. That's my pleasure, mate. I wish you all the best.

18:53Martin, just listening to that, I don't know if you'll be able to answer this, but it's quite similar. At Beanie is asking, why is£20 a year added to everyone's bills to pay for energy debt? Why is£15 a year added to everyone's bills to pay for the warm home discount? Surely I shouldn't have to contribute to either of these things, why can't government look at marginal pricing? Keeps prices too high. Well, first of all, don't call me Shirley. Can you fly this plane and land it? Shirley, you can't be serious. I am serious. And don't call me Shirley. Sorry, fanfare. Terrible joke. It's a very old...

19:27You're too young to know. No, no, I've seen it. I've seen it. It's not a terrible joke. It's a classic joke of the genre. But we shall move on and I shall answer the question. So look, energy debt is a problem and it has to be paid for. I mean, it's partly the energy crisis. Now, some of the energy debt is about firms that went bust. And actually, we are all protected by the supplier of last resort regime. And that is the guarantee that if your energy firm goes bust, you will have continuity of energy supply. Your energy won't be cut off. You'll be moved to a new company and your credit will be protected.

20:02So in a way, that's the cost for all of us to have that level of protection. There are also specific energy debt issues of people who, during the energy crisis, haven't been able to pay their bill. Now, the same goes to that and the warm home discount, which is the warm home discount is a method of giving people, vulnerable people and people on low income, some help towards their energy bills. And that is put on our energy bills, too. You are absolutely right. Those are public policy issues that we need to address what's happening to energy debt. So the question is, who pays? You could have it paid for by the taxpayer, in which case it would be increased taxation to pay for it, or you can have it paid for on the energy bill.

20:48It has been decided that as it is within the energy infrastructure, it is paid for on the energy bill. I mean, I have to be honest with you. Those are relatively small amounts compared to most of what the standing charge is for. I mean, those two in total are less than 10 % is what's going on. And you ask me why? That's why. A marginal pricing model, absolutely, you're right. As I've already talked about, you know, if we were to get rid of most of the standing charge and pay it on unit rates, then it would be people who use more energy, who pay more and contribute more towards those costs. And I think there's some fairness in that.

21:22But at the same time, I would caution that I think we need to protect vulnerable high users too. You might be thinking, what's a vulnerable high user? Well, an older person in an inefficient house that is unable to increase the inefficiency of their house. Or someone who has two children in wheelchairs that need electric wheelchairs, that need charging every day and use a huge amount of electricity because of that. Or someone who's got other medical equipment and oxygen tanks sitting in their house that they need because of somebody who's got a disability. and those people can use a huge amount of energy.

21:52So while I absolutely am in favour of restructuring the system so that standing charges are lower and unit rates are higher, or preferably standing charges are lower and unit rates aren't higher, that would be even better, then I think we do need to be mindful of the small number of vulnerable people who this would affect in a very negative way, and we need to protect them too. Now, while this is a Home Energy Bills Question Time special, most Mondays we do a question time special where you can ask me anything you like within reason. So if you'd like to propose a question, whatever it is, any subject at all, then just email martinlewispodcast at bbc.co.uk and podcast producer Matt will filter them to his heart's content.

22:41Right, a question from Adam on solar panels. He's got solar panels and he's asking, should he be on a special contract and are there good contracts for solar? He's currently with British Gas for gas and electric and has been for the best part of 20 years. Okay, this is quite complicated. Now you're on an older system, so I'm presuming you are on a feed-in tariff system. That lasted for people who got their solar panels installed until about April 2019. Afterwards, you'll be on a smart export guarantee. Now with the feed-in tariff system, you are paid for generating energy even if you use it. And that is a locked in rate for 20 to 25 years.

23:21It's a great rate and you get that whatever. But there's a second element that you're also paid, which is you are paid for energy you export to the grid. And that is the same as the smart export guarantee. They don't get paid for generating electricity. They just get paid for energy exported to the grid and they get a saving on their energy bills for the energy that they use themselves. Even though you're on the feed-in tariff system, you can switch that bit, the bit where you're paid for energy exported to the grid, to a new provider while keeping the feed-in tariff payment, which you absolutely want to do.

23:57Whether you should or shouldn't depends. Now, there are actually four types or four categories, in my view, of smart export guarantee tariffs, which is where you're paid for the energy exported to the grid. The first type that pays the best is only for firms when you get your smart export guarantee with the firm who fits your solar panel. You've not done that, so that doesn't count for you. The next type is only if you also have batteries, which you haven't mentioned. So that's not for you and they pay well. The next type and the one that will pay you the most is if you get your energy and your solar export guarantee from the same firm and they're linked together.

24:35And that'll pay you up to around 15 pence per kilowatt hour at current prices, and this does vary, it's not locked in, for the energy that you put into the grid. If you don't do that and you have a standalone tariff, which sounds like it's what you have at the moment, you'll be being paid somewhere more in the region of 3 or 4p as opposed to 15p. So the question then becomes, hopefully you're following me, is it worth linking my energy provider to my smart export guarantee tariff in order to get a higher smart export guarantee tariff? Would the gain I made on my smart export guarantee outweigh the fact that I'm probably not going to be getting the cheapest energy deal on the market?

25:22So the answer, having crunched the numbers, loads of ifs and buts though, but just to give you a rough rule of thumb, is if you export more than 20 % of the electricity you use, then you are probably, assume you've got decent sized solar panels, you are probably better off linking your solar export guarantee tariff with your energy tariff. If you export less than 20 % you use, in other words, you're using most of the electricity that you generate, then you should probably just find yourself the cheapest deal for energy. If you want to know, there are lists online, that's all I'm allowed to say, of what the different tariffs are available out there and where the best rates are.

26:05So you should be able to find that. I know that's complicated, but I hope it made sense.