Archive: MoneySavingExpert's Money Tips Email

Martin's Energy briefing
Electricity use costs to RISE 5.1% in 1 Jan Price Cap. More rises likely in April

 New. Beat the hikes with a new, exclusive, cheapest fix. It's 12% less than today's Price Pants Cap. Many will save over £200/yr! 

You may be surprised to read about a 5% elec rise because on Friday, when Ofgem announced the Jan Price Cap, most news bulletins called it a 0.2% rise. Yet that only scrapes the surface...

In reality, electricity costs will rise significantly, so will the much-hated Standing Charges, but gas costs will fall. If you're on a price-capped tariff (most people are, see am I on the Cap?), if possible ditch it now. The easy way is with the new 12% cheaper, cheapest fix which guarantees no price hikes.

So, those on the Price Cap with high electricity and low or no gas use will see bills materially rise come 1 Jan and later. I'll explain the perverse reason this is happening below, but first let me take you through the practicals, including...

- New cheapest fix: save 12%
- Further Price Cap rises predicted
- £100s too much in energy credit? It's a perfect time to check
- Energy frequently asked questions (& answers)...

A fixed tariff is where you lock in a rate for a set time (as it's the rate, not the price, use more & you still pay more) giving you the peace of mind of price certainty & currently substantial savings over the Cap too.

To show you how much it can pay to do, this is an email from Sam a month ago: "After using the Cheap Energy Club tool (which is very good might I add as it auto fills in the info for you) it has collectively saved my household £200/yr, my parents £500, my partner's mum £400, my partner's dad £300 and my partner's grandparents £400!"

• New. E.on Next 14mth fix. On average 12% cheaper than current Cap.The new E.on Next 14mth fix via our Cheap Energy Club comparison is on average today's cheapest fix - though your exact results depend on location & use, hence why we send you through our comparison. It's not available on most comparison sites, but is via us and E.on Next direct, yet go via us and you get an extra MSE £20 dual-fuel cashback (£10 for elec-only switches).
  
  

  Elec: Unit Rate: 25.13p/kWh (current cap: 26.35p | 1 Jan: 27.69p) Standing Charge: 45.86p/day (current cap: 53.68p | 1 Jan: 54.75p) Gas: Unit Rate: 5.20p/kWh (current cap: 6.29p | 1 Jan: 5.93p) Standing Charge: 34.03p/day (current cap: 34.03p | 1 Jan: 35.09p)

  
  As we now know the Price Cap until the end of March, it's clear that over the heavy-use winter period, it's cheaper for both electricity & gas. To see the exact rate where you live, when you do the comparison, within the tariff click the 'More info' link. (PS: kWh stands for kilowatt hour.)
  
  It's available for dual-fuel or elec-only, but only for monthly Direct Debit. You don't need a smart meter, though it's no problem if you have one. It has agreed to MSE enhanced service, ie, if there's an issue, go to it first, but if it doesn't sort it, contact our Energy Club and we can and will escalate it and try to help. 
  
  There are £50 per fuel early exit penalties, but you can move to another E.on tariff without paying them, a useful benefit in the unlikely event something means worldwide energy costs dropped substantially and the whole market changed. 
  
  
• How does this compare to other cheap fixes? Here are the cheapest fixes, showing the saving compared to the current Price Cap (at typical use). All will be shown via the Cheap Energy Club comparison. 

• Other specialist tariffs worth considering... Fixes are the easy peace-of-mind option, yet there are alternative models, though some are tough to display via a traditional comparison site. Here's a quick checklist...
  
  - Low user? EDF's tracker has lower Standing Charges. It's essentially a price cap lasting 14mths, but with £50/yr lower Standing Charges, it's best ONLY for very low users (eg, under roughly £80/mth use).
  
  - Got an electric car? Consider special electric vehicle (EV) tariffs. There are fixes which give cheaper rates for charging your car, and two-rate tariffs where you get cheap overnight rates for charging your car and can then shift other electricity use to that period (be careful with tumble dryers, they're a fire risk overnight).
  
  - Sophisticated user? Rapid price-change tariffs can lead to big savings. Tariffs such as Octopus's Agile or Tracker see price changes either twice-hourly or daily. For those comfortable with this, especially if you can shift usage patterns or have storage batteries, these can mean big savings.
  
  - Got solar panels? Is an all-in-one deal cheaper? Some firms give you better solar panel rates if you get your energy supply from them too. Our guide takes you through who it's worth it for (and who it isn't).

The Price Cap normally moves with average wholesale costs - those energy retailers pay - over the three-month assessment period (we're already a week into that for the April 2026 Cap).

Yet policy and network cost changes impact prices, too. And that's what's driving analysts' current predictions of the April Price Cap, up 3%ish, including the cost of connecting renewable energy in remote parts of the UK, and heat pumps & EVs putting more strain on the grid.

Overall, without a significant drop in wholesale rates, it's predicted to stay higher than the current Price Cap for most of 2026. So, fixing at 12% below the current cap looks a no-brainer. 

The further in the future you go, the more it's crystal ball-gazing. A major geopolitical event can always change things, and they could get much cheaper or go the other way, but all we can do is look at what common predictions are right now.

Ultimately, if you fix and prices rise, no worries, your bill won't rise. In the unlikely event you fix and prices drop so substantially the fix is no longer competitive, there's always the backstop option of leaving early and paying the exit penalty.

The upcoming 0.2% rise in January shouldn't mean Direct Debits (DDs) will change for most people unless you're a high electricity user. Use our 'Is your Direct Debit right?' calculator to find out roughly what it should be. If too high, see how to challenge unfair DDs. 

Yet, just as crucial, is how much credit you're in. If you pay by monthly DD, the idea is it spreads the cost so you pay the same each month - in other words, you overpay in summer, and underpay in winter...

November is the peak credit month, you've built it up over summer to use over winter. Yet any more than two months of your Direct Debit is likely too much.

The exact amount you'll be in credit depends on when you started with the firm, but anything more than two months' worth of credit is high. If you're substantially above that, speak to the energy firm to ask for the money back in your pocket, see my how to get your energy credit back blog for full help.

As Dianne emailed last year: "Thanks to you I checked and discovered I was £1,000 in credit with EDF. I am now looking forward to a cheeky little holiday, which I wouldn't normally have been able to afford. Happy days, thank you again."

PS: If you're fed up with monthly DDs and just want to pay for what you use, don't just jump to payment in receipt of bills, look for variable DDs.

Q. What do I do if I'm already on a fix? You can still do a comparison to see how your current fix compares to the one you're on. If it's cheaper, stay where you are. If a new fix is cheaper, remember you'll likely have to pay early exit fees to switch, so factor that in - unless you're within 49 days of your fix ending, in which case they're not allowed to charge early exit penalties.

Q. How do I know if I'm on an energy Price Capped tariff? If you live in Eng, Scot or Wales, unless you're on a fix or special tariff, you're almost certainly one of the 65% of homes on a Price Capped tariff (within Cheap Energy Club we tell you too).

The cap applies to all firms' standard consumer tariffs - the default tariff you're on if you've never changed, or haven't switched since your fix ended. And while it's called a cap, in reality almost all firms price to the max. Here are the biggest Price Capped tariffs...

British Gas Standard Variable | EDF Standard (Variable)
E.on Next Flex | Octopus Flexible Octopus | Ovo Simpler Energy | Scottish Power Standard

Remember, with the cap it's not a limit on the total amount you pay. It just limits the daily Standing Charge and unit rates firms can charge, so use more and you pay more.

Q. I'm in Northern Ireland, what do I do? Northern Ireland has a different system, see our Northern Ireland help.

Q. Should I leave the heat on all day or only use it when needed? This and other energy-saving conundrums are explained in our 15 energy mythbusters guide.

Q. Why are prices going up when wholesale rates are coming down? Unlike previous Price Caps, Jan's rise isn't due to wholesale costs - which fell a little over the assessment period. The upcoming hike is mainly due to specific increased policy and network costs, eg, nuclear investment, debt forgiveness & Warm Home Discount costs. 

These kinds of costs, including the investments in renewables, are usually lumped on electricity bills (as well as Standing Charges) as electricity is seen as more universal - almost everyone has it.

The result is somewhat bonkers. A key govt policy is trying to encourage people to move away from gas towards electricity (via heat pumps, for example). Yet gas unit prices will actually fall in Jan (due to lower wholesale prices) while electricity increases due to policy costs!

Plus, putting these costs on electricity bills is regressive compared to putting them into general taxation (ie, in relative terms, it costs poorer people a bigger proportion of their income than richer people). Adding to the policy perversion of a govt trying to get people to ditch gas.

We know the investment being made in the network and renewables is likely to keep adding costs until the mid-2030s, we need to start thinking about the reality of that now, and how it's paid for.

Q. What are the best ways to cut my energy usage? Take a look at our full checklist of 70+ ways to save energy. It's a mix of hardcore savings and some thrifty crowd-sourced tips (we'll be doing more on this in coming weeks).

Q. I can't afford to pay my energy bills -what do I do? It's always worth first talking to your energy firm. There can be hardship & debt grants from suppliers. For far more guidance, see our full What to do if you're struggling to pay energy bills guide.

Q. What is 'MSE cashback'? Some providers pay energy comparison sites to facilitate the switch (you still get the same price as going direct). Unlike other sites, we don't default to hiding tariffs that don't pay - be very careful elsewhere. Instead, we default to show-all, but when we get paid to switch you, we give you a chunk as cashback. So those that pay us are relatively cheaper for you, and it's likely more people switch to them. Win-win.