Consumer champion Martin Lewis is urging energy customers to consider fixing their tariff after Ofgem confirmed the price cap will rise again from October. The founder of MoneySavingExpert (MSE.com) reacted to Wednesday's announcement on social media, warning that energy rates will be nearly 17 per cent higher than they were in April as households head into the higher-use winter months.
Price cap rise details
The new price cap for Scotland, England and Wales will rise by nearly 4 per cent from October 1, taking the annualised figure for a typical dual-fuel household paying by Direct Debit from £1,663 to £1,723. This amounts to an additional £60 over the year ahead, some £5 a month.
Posting on X, Martin said: “When the July Cap rose by 12.6% the mitigating fact was it was only for the low-use summer quarter.
“Now it's going to rise 3.6% ON TOP of that meaning rates will be nearly 17% higher than in April over the high-use winter period - in fact, prices are the highest they've been since winter 2023.”
Advice on fixing
The financial guru said the cheapest fixed energy deals currently available are around seven per cent below the current cap and roughly 10 per cent cheaper than the new October rates.
He said: “So, if you're someone who has been on the standard tariff for ages, then the safest thing is just to get a cheap fix now - not just any fix, ensure it's as cheap as possible, don't just stick with your own firm.
“Though if you're a regular fixer who'll monitor the market, there's a chance waiting is better.”
His advice comes amid forecasts that households could face another significant increase in energy prices at the start of next year. The latest forecast from energy consultancy Cornwall Insight predicts the price cap could rise by a further nine per cent in January to £1,872 for a typical dual-fuel household paying by Direct Debit.
That would be £149 above the new October figure, although the forecast could change before Ofgem confirms the cap covering the first three months of 2027.
Wholesale prices and VAT
Martin said wholesale prices have continued to climb since the period used to calculate October's cap, with the ongoing conflict in the Middle East having a significant impact. However, he stressed there is no guarantee that fixing now will ultimately prove cheaper.
He said: “Fixes were quite a bit cheaper about six weeks ago. If things in the Middle East settle down, you may be able to fix at far lower prices in future, equally, things could get even worse.”
Martin also highlighted the particularly steep increase facing households using gas. From October, the average Direct Debit gas unit rate will rise by 8.7 per cent from 7.33p to 7.97p per kilowatt hour (kWh), while the gas standing charge will increase by 2.2 per cent to 29.68p a day.
The electricity unit rate will increase by a much smaller 0.8 per cent to 26.32p per kWh, while the electricity standing charge will fall by 4.1 per cent to 54.83p a day.
Martin said the overall price cap would have risen by around 6.2 per cent without the UK Government's decision to temporarily scrap VAT on electricity bills from October. He also cautioned against interpreting Ofgem's £60 increase in the typical annual figure as the amount households will necessarily pay over the next year.
He said: “Ofgem says someone on what it calculates to be 'typical use' would see their equivalent annual cost rise by £60. Yet that’s a bit misleading - the Cap only lasts three months and changes again on 1 January and sadly it's currently predicted to rise substantially again then.”
The price cap applies to standard variable tariffs rather than fixed deals, and actual bills depend on how much energy a household uses.
