Martin Lewis has shared five ways households could cut their energy costs before new prices take effect tomorrow. The founder of MoneySavingExpert (MSE) has issued guidance for people on standard and fixed tariffs as Ofgem's latest Price Cap comes into force across Scotland, England and Wales on October 1.
The increase will take the typical annual bill for a household paying by Direct Debit for gas and electricity to £1,723. That is around £60 more over a year, or £5 a month, if prices remained at that level.
The rise also comes as households are expected to use more energy as temperatures fall and central heating systems are switched back on. Homes on standard tariffs with average usage are expected to spend around £145 on energy in October, compared with £109 in September.
Why prices are rising
Ofgem said higher wholesale gas prices as a result of the ongoing conflict in the Middle East were behind the increase, with volatile global markets remaining the dominant driver of price changes.
The new cap incorporates the UK Government's decision to remove VAT from domestic electricity for six months from October 1. Government estimates suggest the measure will save the average bill payer around £45 a year, while VAT will continue to be charged at five per cent on gas.
MSE calculates that without the electricity VAT cut, the October Price Cap increase would have been around 6.2 per cent rather than 3.6 per cent.
1. Check whether you can beat the new Price Cap
Around 60 per cent of households are on standard tariffs governed by the Price Cap, according to MSE, but Martin said customers do not necessarily have to remain on them.
Writing in the latest MSE newsletter, he said: “You DON'T need to let the hikes happen.”
MSE's analysis found the cheapest fixes available at the time of publication were around four per cent below the new October Price Cap.
The decision could become particularly important because bills may rise substantially again this winter. MSE said the latest forecast points to another Price Cap increase of around 21 per cent from January, although the eventual figure remains highly uncertain and will depend heavily on wholesale energy prices.
EDF has separately forecast a 30 per cent increase, which would take the typical annual bill to £2,098 - £375 above the October level. Ofgem is due to announce the Price Cap covering January to March 2027 in November.
Martin cautions that there is no certainty over where prices will ultimately land. MSE said the possible January increase could range from roughly 12 to 30 per cent depending on wholesale markets and any Government intervention.
2. Take a meter reading
Martin is also urging households without a working smart meter to submit a meter reading around October 1.
This gives the supplier an accurate record of how much energy was used before the new prices took effect, rather than leaving it to estimate how much consumption took place at the old and new rates.
MSE said people on fixed tariffs may also want to provide a reading because of the electricity VAT change taking effect from October 1.
3. Don't automatically leave an existing fix
Martin has a different message for households which have already secured a fixed tariff.
The October Price Cap does not apply to fixed deals, and MSE said many households which fixed previously are paying considerably less than the deals currently available to new customers.
Leaving could therefore mean giving up a cheaper tariff, moving onto higher rates and potentially paying an early exit fee.
MSE said fixed deals can also react to changes in wholesale energy prices more quickly than the Price Cap. This means new fixes could become cheaper if wholesale prices fall, but they could also become more expensive if prices rise further.
There is an important exception for people approaching the end of their deal. Customers within the final 50 days of a fixed tariff cannot be charged an early exit penalty, according to MSE, allowing them to shop around before automatically moving onto their supplier's standard tariff.
4. Check whether a different type of tariff could be cheaper
A conventional fixed deal is not the only alternative highlighted by Martin.
MSE said households which use relatively little energy could potentially benefit from tariffs with lower standing charges.
People with electric vehicles may also be able to save through specialist EV tariffs, particularly where charging the vehicle accounts for a substantial proportion of their electricity consumption.
Time-of-use tariffs offer another option by charging different prices at different times of day, although MSE said these tend to suit people who are willing and able to shift their electricity use into cheaper periods.
5. Check your Direct Debit and get help if you're struggling
MSE recommends households paying by Direct Debit check the amount being taken following the price change to make sure it reflects their actual energy use.
People who have accumulated a large credit balance may also be able to get some of their money back. MSE said households with more than two months' worth of credit could consider asking their supplier to refund the excess.
Martin's guidance for people struggling to afford their energy bills is to contact their supplier and explain their circumstances. MSE said customers should tell their supplier if anyone in the household is vulnerable and check whether they are eligible to join the Priority Services Register.
Some energy companies also operate hardship funds or grants which may be available to customers experiencing financial difficulties.
The October Price Cap will remain in place until the end of December, with Ofgem due to announce the next rates for January to March 2027 in November.
