Martin Lewis reveals the cheapest way to pay your energy bills – and you could save hundreds of pounds

MARTIN Lewis' MoneySavingExpert has revealed the cheapest way to pay your energy bills.

Depending on how you pay your energy bills, you could save hundreds of pounds.

The energy regulator Ofgem confirmed the new price cap last week, with the average bill set to rocket to £3,549.

But many people risk paying even more because of their chosen payment method.

have revealed that paying your energy bills by direct debit is still the cheapest way to pay.

This is because the price cap depends on the payment method.

Those who pay their energy bills by direct debit will see their bills increase by 80% from £1,971 to £3,549.

But those who don't pay for their energy by on receipt of bills will see their bills hiked from £2,100 to £3,764.

This means you could be paying £215 a year extra if you don't pay by direct debit.

MoneySavingExpert say that while ditching your direct debit may help with your cash flow, it will end up costing you more in the long run.

Households who pay by direct debit will often get a discount too.

The discount is automatic and most suppliers will add a line to your bill to say it has been applied.

The Sun recently put together a handy guide to the full list of energy firms that offer a direct debit discount.

British Gas said its customers can save up to 7% on their bill if they choose to pay by direct debit.

On the average annual bill of £1,971 - that's a saving of £140.

If energy bills go up to £3,554 this winter, as is expected, that could mean a saving of £248.78.

Here is a list of the suppliers we know offer a direct debit discount:

• British Gas - 7%
• Utilita 6%
• Shell - up to £48 per fuel type per year
• Good Energy - £15 per fuel type per year
• EDF - 6.6%
• Ovo (discount level not known)
• ScottishPower (discount level not known)

If you don't already pay by direct debit, you can easily switch to paying in this way - speak to your provider.

Not all firms offer a discount though, so if you are doing it to save money it's worth checking first.

Octopus and So Energy do not offer a discount for direct debit customers.

While the new price cap does not come into effect until October 1, Ofgem has warned that some suppliers could start to increase direct debits before then to spread costs.

How do energy direct debits work?

If you pay by direct debit you'll pay your provider a set amount every month - but this isn't actually your bill.

Your bill is the amount you're charged for your energy.

It's a combination of a standing daily charge and your metered energy usage.

It will be different every month, depending on how much you use.

By paying your direct debit ensures there is always enough money in your account to cover this changing cost and keep you in credit.

Energy firms estimate how much they think you'll use over the year and divide this by 12 to determine your monthly direct debit amount.

If you pay quarterly, the yearly estimate will be divided by four.

It's important to be aware that you might be paying for more than you're using at some points during the year and particularly over the summer.

This is because it's unlikely that you'll be paying to heat your home during the warmer summer months.