Consumer champion Martin Lewis has issued urgent guidance to millions of UK households following Ofgem's unexpected announcement of an energy price cap increase set for January.
Price Cap Rise Defies Predictions
The energy regulator confirmed today that the cap will rise by 0.2% from 1 January 2026, pushing the average annual dual fuel bill for a typical household up to £1,758 from the current £1,755. This minor increase came as a surprise to many industry experts who had forecast a slight decrease.
Martin Lewis, founder of MoneySavingExpert.com, explained that the rise stems not from wholesale energy costs, which actually fell during the assessment period, but from a combination of policy and network costs. These include expenses related to nuclear power, network linking, and the Warm Home Discount scheme.
Martin Lewis's Money-Saving Advice
Mr Lewis provided clear advice for consumers concerned about their bills. He stated: "The best move for most people is to get onto a comparison site like www.cheapenergyclub.com and find yourself a cheap fix."
He added a crucial timing tip: "Though I'm hearing a couple of cheaper tariffs may launch next week so you may want to hold until then." These fixed deals could be approximately 10% cheaper than the new price cap, representing a potential saving of around £175.80 annually for the average household.
Breaking Down the Price Changes
The detailed breakdown of the new price cap reveals significant changes to different components of energy bills:
- Electricity unit rates: 27.69p/kWh (up 5.1% from 26.35p)
- Electricity standing charges: 54.75p/day (up 2.0% from 53.68p)
- Gas unit rates: 5.93p/kWh (down 5.7% from 6.29p)
- Gas standing charges: 35.09p/day (up 3.1% from 34.03p)
Mr Lewis highlighted that these changes mean households with high electricity use and little or no gas consumption could see their bills increase by three to four percent in the new year.
He also criticised the structure of these increases, noting: "Electricity is seen as more universal so when they want to add policy costs to bills, they do it there, yet that is somewhat perverse as it means we see a relative increase in electricity costs compared to gas, when the whole policy driver is to move people off gas."
Ofgem director general Tim Jarvis acknowledged ongoing challenges for consumers, stating: "While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets." He emphasised that while wholesale costs are stabilising, they still constitute the largest portion of energy bills, leaving households exposed to market volatility.
