Martin Lewis: Energy Price Cap to rise again, 6.4% on 1 April - here's what it means for you
NEWS: Energy Price Cap to rise again, 6.4% on 1 April. This follows the 1% rise in January and 10% last October. Here's my instant briefing, including WHAT TO DO.
Note from the MSE Team: Martin recorded a video with more reaction after writing this comment piece, so we've added it below.
"Ofgem has just announced that the Energy Price Cap that dictates what two thirds of homes in England, Scotland and Wales pay for energy will rise by 6.4% in April, on top of the 1% rise in January and the 10% rise last October.
"So what does it really mean and what can you do about it? I'm Martin Lewis from MoneySavingExpert.com and this is my instant reaction briefing.
"So, first thing, what is the Price Cap? Well, it is the maximum amount that energy firms can charge for the daily standing charge and unit rates on their standard tariffs – the default tariff that you're on if you've never switched or if you've come off a fix and you've not done anything. You'll know you're on one. It'll tend to be called something like a standard variable or a flexible tariff.
"And if you are on a Price Cap tariff, it's a pants cap. If you possibly can, you want to get off it, get off it quickly and fix.
"First though let me talk you through what's actually happened today. So, we've had the announcement that the Price Cap will rise 6.4% in April. In simple terms, that means for every £100 of energy you pay right now, from 1 April, and through May and June, you will pay £106.40 for it.
"But, in reality, it's more complicated because what the regulator does is, it limits the standing charge, the daily charge – the horrible daily charge that you have to pay just for the facility of having gas and electricity – and the unit rate. And those are changing slightly differently to the way you may expect.
"Let's do electricity first. This is the average UK Direct Debit Price Cap. That is going up 8.7% on the unit rate, but down an average 12% on the standing charge. On gas, the unit rate is going up 10%, the standing charge is only going up 3.2%.
"So, in reality, lower users – let's say someone on £100 a month – will see a less than 6.4% rise. It'll be about 5% on £100 a month with lots of assumptions, whereas higher users will see a higher rise. Someone paying £300 a month will probably be seeing a rise of around 9% on their energy bills in April.
"But even within that, there's another complexity because this is regional pricing. So while on average the electricity standing charge is going down, there are outliers. If you live in North West Wales or London, your electricity standing charge will still be going up.
"As for why, well, I've got the boss of Ofgem on my TV show 8pm ITV tonight and I'm going to be asking him that and putting lots of other questions about this to him as well, as well as explaining in more detail what you can do.
"So that's the reality of what's happening. What should you do about it? I almost got my phrasing wrong. What do you do about it? Okay. Well, let's do this really simply. Right now, the cheapest fixed rate tariffs are 4% below the current Price Cap. There's the current Price Cap. But in April, that Price Cap is going up by 6.4%.
"And after April, we think in July, because wholesale rates have dropped a little bit recently, it might come down a little, but still won't be as low as the current Price Cap. And then in October [it’ll] go up and stay around that level.
"Now of course, those predictions could be wrong, they’re from analysts based on the current situation, if we have peace in Ukraine or the Middle East or Donald Trump does what he says and 'drill, baby drill' and puts more oil in, then that could all impact future prices.
"But on the current predictions, you can fix now and save money, and you can certainly save substantially once it goes up in April. So what you want to do is do a whole of market comparison to find your cheapest fix, because your cheapest fix depends on where you live and how much you use. Three warnings about that though.
"Number one, depending on when you're watching this, this is recorded on Tuesday morning. What is it, the 25 February. I wouldn't do a comparison until 3pm or 4pm this afternoon, because I'm hearing some cheaper fixes will be coming in. So I would wait because you may be able to get a cheaper deal if you wait a little bit.
"Second, remember when you compare, the saving you'll see is compared to the current Price Cap. So it might only be £30 or £40, but in reality that Price Cap is going to go up. So compared to what you would pay if you did nothing, once it goes up in April, the saving will be far bigger and it is still worth fixing.
"And third, remember most comparison sites hide tariffs that don't pay them by default. You have to find a little button and click 'show me all tariffs' if you want to see them. Or even better, you could just use my MoneySavingExpert.com Cheap Energy Club comparison that automatically shows you all the tariffs. So that is roughly what you should be doing.
"There are other tariffs out there some may want to consider. If you have very low usage, then both British Gas and EDF have trackers that track the Price Cap, but with £50 off standing charges per year. So for very low users, that can be beneficial. And sophisticated users probably know about, but should be looking at, things like the Octopus time of use tariffs and the Tomato time of use tariffs.
"But this isn't about that. I'm writing loads more to go in the MoneySavingExpert weekly email. Full details of all the tariffs and everything you can do. This is just your instant heads up on what's going on.”
Full transcript of what Martin said in his video
Let's start with the average Direct Debit Cap...
ELECTRICITY
-
Standing charge: 53.8p/day (from 60.97p) DOWN 11.8%.
-
Unit rate: 27.03p/kWh (from 24.86p) UP 8.7%.
GAS
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Standing charge: 32.67p/day (from 31.65p) UP 3.2%.
-
Unit rate: 6.99p/kWh (from 6.34p) UP 10.3%.
So for every £100 you pay for energy now, from April you'll pay roughly £106.40. Yet, in reality, as the daily standing charge is dropping, some lower users (below £100 a month) will see only small rises, but those who use a lot (above £200 a month) will likely see 7% to 10% increases.
Those are averages, but there is a lot of regional variation in prices. The London and North Wales supply regions are outliers, as electricity standing charges in these areas are rising. You can also use our 'What you'll pay from 1 April' calculator to see how the new Price Cap will affect you.
How do you know if you're on a Price-Capped tariff?
If you're not on a fix or special deal you are likely on the Price Cap. These are firms' standard default consumer tariffs, often called 'Standard Variable' or 'Flexible' tariffs. If you don't know for sure, assume you, like two thirds of homes, probably are on a Price-Capped tariff.
The Price Cap is a pants cap – GET OFF IT IF YOU CAN. And fix now if you haven't already
The cheapest year-long standalone fixes right now are about 4% LESS than the current Cap, never mind once it rises in April, so if you get a good fix now you lock in at a cheaper rate for a year, get price certainty, save instantly and save relatively more once we get to April.
Your cheapest fix depends on where you live and how much you use, so do a comparison (the MoneySavingExpert Cheap Energy Club is whole-of-market by default), though I'd wait a few hours as I hear more tariffs are being launched. Remember though, the savings comparison sites (including Energy Club) will show now are compared to the current Cap – savings will be bigger compared to April's Cap.
What happens after April?
Current analysts' predictions are that, after April's rise, the Cap will stay at roughly that rate for the next year. Though the further out you go, the more crystal-ball gazing that is (and the chance of peace in Ukraine, the Middle East, or the US pumping out more oil could see energy prices fall).
Still, the safe bet based on current predictions is to fix.
Other options than fixing
Those with very low usage only (under say £80 a month) should also look at British Gas' and EDF's special tracker deals, which discount £50 to £100 off the annual standing charge (with low usage, that's a bigger proportionate saving).
And sophisticated users should look at (or likely already know about) Octopus or Tomato Energy's time of use tariffs.
2.7 million more to get Warm Home Discount
The Government has proposed to expand the £150 Warm Home Discount payment to 2.7 million more low income households in Winter 2025/26 (though a chunk of that'll be eaten up by the cap rise – this 6.4% rise is equivalent to paying £111 a year more).
It'll be done by getting rid of the 'high energy cost' criteria for those on means-tested benefits, such as Universal Credit, which helps working and non-working people on low incomes.
That's good as the Warm Home Discount's currently a terribly-implemented system, which left many, literally, unfairly out in the cold.
There's also a proposal on old energy debt support, which sounds good on the surface, but needs a careful read so I'll leave that for now.
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22 April 2025
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