Martin Lewis urges people to do 'simple thing' now as energy price cap set to rise in January

Consumer expert Martin Lewis is urging households to do "one simple thing" now after Ofgem announced a rise in its energy price cap from January.

The regulator said the 1.2% increase in the price cap would see the typical bill for a household going up from £1,717 to £1,738 a year - a rise of £21 per year or around £1.75 a month for the average dual fuel household paying by direct debit. The price cap doesn’t limit what you pay for energy - it sets a cap on the unit rates and standing charges, which means higher energy users will pay more than this, and low energy users will pay less.

Martin is asking households to take action now, and has explained how energy bills could fall again this April but not by much, reports the Mirror. New forecasts from Cornwall Insight predict energy bills will drop slightly by 1.4% in April to £1,713 per year for a typical dual fuel user, before dipping slightly again in July.

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Martin said: “Current predictions are the Price Cap will rise again on 1 Apr by a couple of percent, then drop slightly in July and slightly again in Oct. Even then it's still expected to be slightly MORE than now.

"So over the next year it's predicted you will pay a couple of percent more than now on average. The cheapest fixed tariffs available right now are around 5% LESS than the current price cap. Therefore the simple thing to do is lock into a fix now to save money and guarantee no future hikes.”

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Uswitch flagged the current cheapest fix as Outfox the Market, Fix'd Dual Nov24 v2.0, which is priced at £1,606 a year for an average household with typical usage. The comparison site also recommended looking at EDF Energy Simply Fixed Direct 1Yr Jan26 and British Gas Fixed Tariff 18M, which are both set at £1,608 a year.

Richard Neudegg, director of regulation at Uswitch, said: “Right now, the cheapest 12-month fix is meaningfully lower than the January price cap and would save a household with typical usage up to £132 per year against these upcoming rates. Customers should run a comparison to see what savings they can make. There are lots of fixed deals on the market right now, the majority of which beat the current price cap.”

Ofgem has also urged customers to take advantage of increasing choice among energy suppliers and look for the best deal to help keep their bills down, saying households could save up to £140. The regulator changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.

The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers for each kilowatt hour (kWh) of energy they use. It does not limit total bills, because householders still pay for the amount of energy they consume.