Martin Lewis urges energy customers to check for fixed deal after price cap increase
Energy bills will rise again at the start of 2025, with charities warning that a 'fourth winter of the energy bills crisis looms large in people’s minds'.
Ofgem has confirmed household energy bills are to rise again from New Year's Day as it announced a 1.2% increase to its price cap.
The regulator said the increase would see the typical bill for a household in England, Scotland and Wales increasing from £1,717 to £1,738 a year, or around £1.75 a month.
It follows the price rising by 10% in October.
Tim Jarvis, director general of markets at Ofgem, admitted the cost of energy "remains a challenge for too many households".
However, he said that more tariffs are entering the market and urged customers to "shop around."
On Thursday, consumer champion Martin Lewis urged people to "take action". Responding to the energy price cap announcement, Lewis told GMB: "Fix. Take some action yourself. Stop letting energy firms rip you off by putting you on the price cap. Take some action. Go to a comparison website and fix."
Read the full article below or click the headlines to skip ahead
> What is the energy price cap?
> Should I fix my deal now or ride it out?
> How else could I save on my bills?
> Is this latest energy price better or worse than previous ones?
> When could energy bills come down?
What is the energy price cap?
The energy price cap was first introduced in 2019 by regulator Ofgem over concerns that customers were paying a "loyalty penalty" by staying with the same provider, many of whom were pushing up their prices.
Energy suppliers are now bound by a limit on the unit rate of gas and electricity they can charge customers. The price cap, which applies to England, Scotland and Wales, is reviewed every three months. Prices in Northern Ireland are managed separately by the Utility Regulator's tariff review process.
The energy price cap also limits standing charges – a daily fixed amount you have to pay, no matter how much energy you use, the Energy Saving Trust says.
The price cap is largely based on the cost of energy on wholesale markets, with the regulator confirming the level for the first quarter of next year on 22 November. It does not limit total bills, because householders still pay for the amount of energy they consume.
Should I fix my deal now or ride it out?
The energy price cap does not apply to people on a fixed-term energy tariff – a tariff with a fixed end date and agreed fixed per unit price.
It doesn't mean your bill will be the same every month, as you are still charged for usage, but the price per unit will remain the same throughout.
Whether or not switching to a fixed deal is worth it largely depends on how much you can expect to pay under the next energy price cap.
As most fixed energy deals last for one or two years, customers should also be thinking about the possibility of prices dropping in the near future when deciding whether to make the switch.
While this is a bit of a gamble, Money Saving Expert founder Martin Lewis advises: "If you find a fix for the same price as the current price cap, it's predicted you'll save over the year compared with staying on the price cap."
There are some alternative tariffs out there that can offer you a better deal, including E.on's Pledge tariff, which is kept around 3% below the price cap, and EDF's Simply Tracker, which has lower standing charges and is 3% lower than the price cap on average.
You can use Uswitch's energy comparison feature to compare your current deal with various fixed deals to see how much you could potentially save.
How else could I save on my bills?
Aside from switching deals, there are several small changes people can make to the way they use power at home to bring their energy bills down, says Brian Horne, technical knowledge lead for the Energy Saving Trust.
Setting your central heating programmer so you only heat your home when you're in is one easy way to save money, he says, as well as keeping your thermostat at a suitable temperature – ideally between 18 and 21C.
"Try turning the radiator down one degree and see if you're still warm enough, and turning the radiator down in rooms that you're not using at that moment," he tells Yahoo News.
"If you've got a combi gas boiler, you could try turning the thermostat down on the boiler itself. I'd turn that down to about 60C – that will just make the boiler a bit more efficient.
Getting a smart meter can help you gain a better understanding of where you're wasting money, for example, by leaving devices on overnight, but it is more likely to save you money over the long term rather than immediately, Horne says.
"It means that over time you will be able to benefit from new services. If you're in a property where you could fit the solar panels and a battery for example, then you can use those with your smart metre to access smart tariffs and save more money.
"When energy companies start offering you cheaper electricity at certain times, as a one-off or as a smart tariff, then you can take advantage of that. So it just opens up opportunities for you, but for quick wins to save you money next week, it's best to look at the more practical hands-on stuff."
So-called "vampire devices", which use energy in the background while in standby mode, are also ones to look out for, such as smart speakers or some game consoles.
Is this latest energy price better or worse than previous ones?
The latest price cap is 10% or £190 lower than a year earlier, and 57.2% or £2,321 less than during the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022.
But the context is different. Millions of pensioners are facing a winter with less support after the government decided to scrap winter fuel payments for those who do not receive pension credit or other benefits, meaning around 9 million pensioners will miss out on the payments of up to £300 this year.
Campaigners say the change will make things worse for older people already struggling in the winter months.
Caroline Abrahams, charity director at Age UK, said: “Older people, struggling without their winter fuel payment, who were praying for a reduction in energy prices to help them in the New Year, will be bitterly disappointed today.
“The news that the energy price cap is instead slightly rising is the latest in a series of blows for pensioners living on a low or modest income, who do not receive Pension Credit because they don’t claim it or are not eligible.
“There are millions of older people in this situation and we know that many are hoping against hope that something will turn up to help ease their situation over the next few months when the weather is at its coldest.
“If you are an older person for whom every penny counts, managing your energy bills until the rise in your State Pension starts coming through from April just got harder.”
When could energy bills come down?
While there is little hope of UK energy prices returning to pre-crisis levels, they are expected to fall slightly in both the second and fourth quarters of 2025, according to Cornwall Insight.
Money Saving Expert predicts the price cap to fall by 1% for the period between April and July, which would see a typical customer paying £1,711 a year, although it describes this as a "weak prediction".
While it accepts its estimates for the rest of the year are even hazier, the consumer advice website suggests the cap could fall 2% between July and September, bringing average annual bills to £1,678, before increasing by 0.5% from 1 October, increasing bills to £1,686.
Do you need support?
You can visit the Ofgem website to check if you are eligible for current government support schemes, including the warm home discount, the cold weather payment and the winter fuel payment, as well as grants and help from charities.
Charity Turn2us has a benefits calculator and grants search tool to help you ensure you're receiving as much support as possible.
