Martin Lewis flags new 'cheapest energy deal' from British Gas which could save you £285

says households could potentially save £285 a year as a major provider has launched the "cheapest" on the market.

This week's Money Saving Expert (MSE) newsletter focused on energy and, more specifically, highlighted new deal. The supplier's new offer is 15.4% - or around £285 a year - below the current Price cap and is a 12-month fix.

The MSE founder said this meant it would be "substantially cheaper" than where the price cap is expected to be over the coming year. The new energy deal is available to both new and existing customers, and if you are already on a British Gas fix, you won't be charged an early exit penalty if you move to this.

In the newsletter, Martin said that wholesale gas and electricity rates had dropped in the last few weeks. However, Ofgem's price cap remained "stubbornly high". Martin warned that over two-thirds of households in the UK were on the price cap, which will stay at the same rate until July this year, when it will drop.

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The Ofgem energy price cap rose from £1,738 to £1,849 on April 1, for the average dual fuel household paying by direct debit.

The price cap sets the limit on how much your energy supplier can charge you for each unit of gas and electricity you use, plus standing charges. This means that there actually isn't a cap on - instead, the headline figure describes how much the typical direct debit household pays per year.

Martin noted that although the price cap is set to drop this July, it won't be "as cheap as fixing". He explained: "On 1 July the next Price Cap comes in, and it will last three months. Its level moves primarily with average wholesale rates from mid-Feb to mid-May. As we're now three-quarters of the way through this period, predictions are firming up. It will undoubtedly get cheaper, and the range is closing in to DOWN 8% to 9%...

"Latest predicted July Price Cap change by each set of analysts: EDF -8.2% | British Gas -8.5% | Cornwall Insight -9.0%."

Martin then noted that as the price cap isn't predicted to get cheaper, households should try and get on a cheap fix now. He said: "If correct, a cheap fix now will save you cash & give peace of mind. Admittedly, the further out you go, the more crystal-ball-gazing it is, but fixing now at 15% below the current Cap is far cheaper than staying on the Price Cap for the next year, if the analysts' predictions, based on current market forecasts, are right.

"Of course, our uncertain means many things could happen that kick trend lines in wildly different directions. And, certainly, factor in the value a fix's certainty gives you and it makes it a very strong option for most."

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