The Energy Price Cap is set to rise by 13% from July
Martin Lewis has issued advice ahead of the Energy Price Cap rise (Image: ITV)
Millions of households across the UK are facing higher energy bills as the Energy Price Cap is set to rise by 13% from July. However, according to consumer finance expert Martin Lewis, many people may be able to avoid the increase by switching to a fixed-rate tariff before the new cap takes effect.
Writing for MoneySavingExpert (MSE), Martin said the upcoming rise is largely the result of higher wholesale energy costs feeding through to household bills after a delay. The Energy Price Cap reflects wholesale prices from several months earlier, meaning recent market increases are only now being passed on to consumers.
The increase will primarily affect customers on standard variable tariffs, which are regulated by the price cap. The biggest impact is expected to be on gas users, with gas unit rates rising significantly more than electricity rates.
Martin argues that consumers currently on the price cap should consider comparing fixed-rate deals across the market rather than simply accepting the higher charges from July.
Martin said: “While there’ll understandably be much argument in political circles about who or what’s to blame, the key for consumers’ pockets is that these changes only apply to those on firms’ bog-standard tariffs.
“Those on fixes won’t see a rise. And that means everyone on the Price Cap should consider getting off it, if they can, for example by locking in a fixed rate below the current Cap – up to 4% below. Do that and you start saving straight away, and then from July the fix will be 15% cheaper than the Cap.
“By October, things for those who stay on the Price Cap are likely to be even worse, with it predicted to rise again by a couple of percent. And even if the conflict in the Middle East ended tomorrow, while that may mean the Cap drops a bit rather than rises in October, it’s unlikely we’d see it return to where it is today. So, fixing seems the risk-averse bet for most.”
At the time of writing, several fixed tariffs were available below the current cap level, offering immediate savings and potentially protecting households from further increases later in the year.
However, consumers should be aware that many of these tariffs require payment by Direct Debit and may include early-exit fees.
The outlook beyond July remains uncertain. Analysts cited by MSE are currently forecasting that the next Energy Price Cap period, beginning in October, could rise by a further 2% to 3% if wholesale prices remain elevated.
While market conditions could improve, Martin suggests that consumers who value certainty may find a fixed tariff an attractive option.
For households already on a fixed tariff, the decision is less straightforward. Martin notes that many existing fixes are currently cheaper than new deals being offered. In such cases, switching early may not be worthwhile, particularly if exit fees apply.
Ultimately, Martin stressed that the decision comes down to individual circumstances and appetite for risk. While energy prices could fall in the future, fixing now offers protection against further increases and provides greater certainty over household budgeting.
Consumers concerned about rising bills are encouraged to compare tariffs carefully and seek support from their energy supplier if affordability becomes an issue.
MoneySavingExpert also recommends exploring energy-saving measures and available hardship support schemes for those struggling with costs.
