Martin Lewis has highlighted "bad news" surrounding the next Ofgem price cap, as he set out how costs will change in the coming weeks. On Wednesday, August 26, the regulator announced a 4% increase of the energy price cap for the period covering October 1 to December 31, 2026.
Lewis, the founder of personal finance website MoneySavingExpert.com, responded to the announcement on X, laying out the scale of successive rises over 2026.
Lewis explains the rise
"(BAD) NEWS: The @Ofgem Price Cap for Eng, Scot & Wales for the three months starting 1 October is to RISE 3.6%, even when you include the Government's six-month cut to electricity VAT that starts the same day," he wrote. It's worth noting that Ofgem rounds that 3.6% increase to 4% in its announcement.
"When the July Cap rose by 12.6% the mitigating fact was that it was only for the low-use summer quarter," Mr Lewis explained. "Now it will rise 3.6% ON TOP of that, so rates will be nearly 17% higher than they were in April, over the high-use winter period," he added, saying prices are "the highest they've been since Winter 2023".
New October 1 rates
Mr Lewis also laid out the new October 1 Price Cap Direct Debit average UK rates including VAT when it's charged, noting that the rates vary by region. They include:
- Electricity unit rate 26.32p/kWh (was 26.11p) up 0.8%
- Electricity standing charge 54.83p/day (was 57.19p) down 4.1%
- Gas unit rate 7.97p/kWh (was 7.33p) up 8.7%
- Gas standing charge 29.68p/day (was 29.04p) up 2.2%
Mr Lewis says the additional costs would be "even worse" without the electricity VAT cut introduced by Prime Minister Andy Burnham in the opening days of his premiership. Without it, on 'typical use' there would have been an increase of roughly 6.2%, he added.
Impact on consumers
"It also means those with electricity-only use rather than gas too will see a much lower rise, and some on very low electricity-only usage may see a slight fall, as the electricity Standing Charge has been cut (mainly due to the scrapping of VAT)," he wrote.
Mr Lewis stresses that the cap applies only to Standard Tariffs and dictates the maximum Unit Rate and Standing Charges firms can charge on their Standard Variable Tariffs. It doesn't apply to people on fixed tariffs, with rates locked in for a set period, or to most special tariffs. Mr Lewis also offered advice on whether it's a good idea to get on a fixed tariff now, ahead of any further price rises.
