Martin Lewis has warned households to act now after Ofgem announced energy bills will rise again in October. The MoneySavingExpert founder urged people to check their current tariff, as millions could see bills increase when the new price cap takes effect.
Price Cap Rise Details
Ofgem has announced the price cap will rise by 3.6% from October 1, following a 12.6% increase in July. However, Lewis explained the headline figure doesn't tell the full story, particularly for households that rely heavily on gas. He said the October cap would come at a difficult time because it will last through winter.
Average energy rates will be around 17% higher than in April, meaning households could face significantly higher bills compared with earlier in the year.
Electricity and Gas Impact
There is some good news for electricity users. The electricity unit rate is set to rise by just under 1%, while the daily standing charge will fall by around 4%. This means electricity-only users could see a very small increase, and very low users could see costs fall.
Gas is where households will feel the biggest impact. The gas unit rate is set to increase by 8.7%, while the standing charge will rise by 2.2%. Lewis warned that heavy gas users could see bills rise considerably more than the 3.6% headline increase.
Who Is Affected and Lewis's Advice
The price cap only applies to standard variable tariffs. Lewis explained that almost every energy firm prices its standard variable tariff at the maximum allowed under the cap, so customers on these deals should expect price increases from October 1. Households on fixed-rate or specialist tariffs will not be affected. However, the temporary removal of VAT on domestic electricity ends on October 1, so fixed-tariff customers could see electricity costs fall by around 4.5%.
For those facing higher bills, Lewis advises switching to a cheaper fixed-rate deal. The cheapest fix available is around 7% cheaper than the current price cap, and with the October rise, a cheap fixed tariff could be around 10% cheaper than remaining on the cap. He also pointed to predictions that the cap could rise by another 10% in January, though he stressed this is uncertain and depends on "wholesale energy prices and global events." Based on the balance of probabilities, he believes fixing now is likely to save money for households currently on the cap. However, he acknowledged that cheaper fixed deals could become available if wholesale prices fall.
Commenting on his TikTok video, one user said: "What's the purpose of having a regulator, when they don't do anything." Another added: "Remind me, how many billions of profit did they make last year?" A third said: "How is living like this actually legal? Like when will it stop?!" One more user asked: "Where is our money actually going!"
