Ofgem has confirmed the UK’s energy price cap will rise by 4% on October 1, adding an extra £60 a year to the typical dual fuel bill. The regulator attributed the increase to ‘volatile global gas markets’ caused by the ongoing Middle East conflict. Around 65% of households in England, Scotland and Wales will be affected, with prices reaching their highest level in three years.
Why the Cap Is Rising
Neil Kenward, director general of markets at Ofgem, said: ‘High international gas prices are continuing to drive energy costs in the UK. We welcome the Government’s intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter.’
Martin Lewis noted the rise ‘would’ve been even worse’ without the recent domestic electricity VAT cut. He also warned on X that the cap only lasts three months and changes again on January 1, 2027, adding: ‘sadly it’s currently predicted to rise substantially again then, though that’s a bit of crystal-ball gazing.’
Fixing Could Save Around 11%
Money Saving Expert (MSE) suggests there is a way to potentially avoid the worst of these increases, but it depends on ‘how risk averse you are and your current situation.’ According to MSE, the cheapest fixed deals available now are about 8% less than the current cap, or around 11% less than it will be from October.
For those on a tariff determined by the Ofgem price, the team says ‘the risk averse thing to do right now is to fix your energy, as this will lock in your rates for a year.’ However, there are caveats. Martin advises not to ‘just grab any fix’—it needs to be cheaper than the current cap—and notes that ‘fixes were quite a bit cheaper about six weeks ago.’ He adds: ‘if, and it’s a big if, things in the Middle East settle down you may be able to fix at far lower prices in future.’
What the New Cap Means
The upcoming cap, applying from October 1 to December 31, is set at £1,723 per year for a household using a ‘typical’ amount of electricity and gas and paying by Direct Debit. The previous cap, from July 1 to September 30, was £1,663.
For gas, the average unit rate rises from 7.33p per kilowatt hour (kWh) to 7.97p, up 8.7%, while the average standing charge increases from 29.04p to 29.68p per day, up 2.2%. For electricity, the average unit rate goes from 26.11p to 26.32p per kWh, up 0.8%, but the average standing charge drops from 57.19p to 54.83p per day, down 4.1%.
How to Switch and Who Is Affected
To find the cheapest fix, MSE recommends using a comparison tool like its Cheap Energy Club. Before switching, check whether your smart meter will continue to work in smart mode and whether you are on an existing contract that could incur exit fees. The new cap takes effect on October 1 and lasts three months, so any switch should happen before then.
Popular price-capped tariffs include British Gas Standard Variable, EDF Standard (Variable), E.on Next Next Flex, Octopus Flexible Octopus, Ovo Simpler Energy, and Scottish Power Standard. Specialist options include British Gas’s tracker deal, which discounts up to £60 off the annual standing charge, electric vehicle tariffs, and rapid price-change options for those who can shift their energy use outside peak periods.
For those already on a fixed deal ending in less than 50 days, MSE says you can’t be charged exit fees, so you are ‘free to ditch it and switch.’ However, since few cheap tariffs remain below the cap, ‘you may be better waiting and regularly doing a comparison to see if cheaper fixes become available over the next few weeks.’ If you have more than 50 days left, MSE explains: ‘Now might not be the best time to think about switching, as ditching your current deal and getting another fix will likely mean you’ll pay more and will almost certainly have to pay early exit fees.’
Amy Knight, personal finance expert at NerdWallet UK, told Metro: ‘While cutting down on energy use can help save money on bills, this isn’t always an option. Instead, focus on getting more value from the money you spend heating your home.’ Her tips include asking for a refund if you’re overpaying by direct debit, turning down the flow temperature of your boiler, keeping radiators uncovered, and looking at energy efficiency ratings when buying new appliances.
