Martin Lewis: On a FIXED energy deal? Will you pay less under the new 1 Oct price guarantee?

1. The energy price cap will rise by 80% in October (to £3,549/year on typical use)

The energy price cap limits what firms can charge in England, Scotland and Wales for their default standard variable tariffs. It currently changes every six months, though that'll soon be every three. The vast majority of homes, about 85%, are now on it – pretty much everyone who isn't on a fix.

You're on it if you've never switched tariff, if your cheap fix ended and you did nothing, or if your firm went bust last year and you were moved elsewhere (and haven't switched again).

The price cap is misnamed though. There's no maximum amount you'll pay. What's actually capped are electricity and gas standing charges and unit rates (the link shows the new and current ones). But it is mostly predictable as it is dictated by regulator Ofgem's published algorithm, based mainly on year-ahead wholesale prices.

Here's the latest intelligence on how it'll move. I warn you – it's grim reading.

I'm basing my workings below on Cornwall Insight's predictions – it has a strong track record and its latest forecasts are bang up to date, after the recent spike in the year-ahead wholesale rates. Though these are only predictions; nothing is guaranteed.

2. There are NO tariffs meaningfully cheaper than the current cap

Before the energy world changed last October, I always said the price cap rate was pants, so switch to something cheaper. Today, there are no tariffs meaningfully cheaper than the current price cap. So none of this is about switching somewhere cheaper than now...

3. Yet there are fixes cheaper than the predicted upcoming caps

So let's get to the nub of this. This is about whether there's a deal likely to be cheaper than the price cap if we look over the next year. For that, clearly there need to be fixes you can lock into that are cheaper than the expected upcoming price caps. And there are.

First, we have to factor in one month on the current rate, three at October's, three at January's, three at April's and two months at July's (trickier to do as the 2023 rates are a very weak prediction). Then, we need to adjust for higher use in the winter. And after this, if the predictions are right, on average you'll pay 151% more over the next year than you do now. Of course, some of this is crystal-ball gazing and averaging, but overall my best guess as a rule of thumb is...

This isn't an exact science – do watch my video explainer from earlier this year if you want to understand more. Fixing below this point is still not a slam dunk, I can't promise I've got this right, there are too many unknowns – this is just my best guess with the information I have at the moment.

Now over to the MSE team, who update the following status report daily…

5. I can't decide if fixing is right – help!

See this as a way you may be able to squeeze a little bit off your bills over the next year, and get some price certainty. But unless you're with one of the firms that'll give you one of the cheapest existing-customer fixes, it's certainly not a slam dunk – you will pay a lot more in the next few months to fix now, but the hope is you'll gain later.

And remember, there are a lot of 'ifs' and 'buts' here. So...

If you want price certainty, the cheapest fixes now give you that, but you'll pay more in the short term. If in doubt though, there's nowt wrong with playing safe and sticking on the price cap.

And it should be noted if wholesale rates drop, cheaper fixes could be available in future, so by locking in now you miss out, especially if your fix has higher exit penalties.

Though Ofgem has put a 'market stabilisation' charge' in place, which means if that does happen, outrageously the new firm must pay the old firm, which I think will mean fewer vastly cheaper deals will be offered.

Then to a couple more risks.

First, the political risk. There will be a new administration in place with a new PM on Monday 5 September. The energy situation is so catastrophic you'd hope, or frankly pray, they'd put something more in place to help. It had looked unlikely to skew the market (for example, reduce the price cap, but that would be of no help to those on fixes). Though there's growing talk that this may be possible.

Plus if you do fix, and take the choice to pay more now to hopefully save later, there is a risk the provider goes bust, and you lose the fix and end up being back on the price cap anyway. With the bigger firms, one hopes that is very unlikely to happen, but it would be remiss of me not to mention it.

6. I'm a Bulb customer – can I fix?

I've had many questions on this, so wanted to note a special answer. Bulb is, uniquely, in 'special administration', as when it went bust it was too big to be moved to another firm.

'Special administration' is like a normal administration in that the administrator's job is to protect those people Bulb owed cash to, but crucially the 'special' bit means they must also focus on consumer interests.

So Bulb runs like an ongoing concern even though it isn't one. But it is very unlikely it will offer any existing-customer tariffs – it'll just stick on the price cap, so you have fewer options.

However, Bulb customers are free to leave and switch elsewhere.

So the prime choice for you is whether to go for the 'cheapest open-market fix' which we list in the status alert above, as that takes customers from any firm.

These tariffs are not usually as cheap as the existing-customer fixes. Though some days they are within our 'Is it worth fixing?' percentage, while other days they aren't, as they change constantly.

7. 'I'm on a fix now, and it's ending soon, what do I do?'

The likelihood is your current fix is far cheaper than anything else available, so stay on it as long as you can. When it does end, by default you'll be moved to a price-capped tariff, so the logic of whether to fix or not then is the same as above.

The only difference is timing. The further away your fix is from ending, the less time you'd have on the current cheaper price cap rate. So that means it would be worth fixing at a slightly higher percentage than the one above.

8. Energy price hikes will be hell for many. If you're already struggling to pay, some help may be available...

The Government has announced a new energy bill support package worth at least £400 to almost all households and over £1,000 to some. This will apply regardless of whether you are on a price-capped tariff or if you fix. See my Q&A with then Chancellor Rishi Sunak on the key measures.

Yet there are still many who are finding, and will find, paying energy bills desperately difficult. Our What to do if you're struggling to pay your energy bills guide covers everything you can do and where to get help, and has info on all the new cost of living support schemes.

Now back to the MSE team, with a new tool to help you work out if a fixed deal is worth considering…