Martin Lewis has urged households to act now as Ofgem’s energy price cap is confirmed to rise again in January.

The energy regulator reviews and updates the price cap every three months, meaning changes take effect in January, April, July and October each year. The price cap sets the maximum rate per unit and standing charge that customers can be charged by suppliers for their energy use but not the total bill, so those who use more energy ultimately pay more. Ofgem has said energy bills are set to rise by 0.2% from January 1 meaning the average dual-fuel households in England, Scotland and Wales will pay about 28p more per month. 

For the average household paying by direct debit for gas and electricity, the overall bill will be £1,758 a year, up from the current £1,755 – an increase of £3 annually. Standing charges, which is the amount consumers pay per day to have energy supplied to their homes, are set to rise by 2% for electricity and 3% for gas or 2p a day, largely due to costs linked to the government’s Warm Home Discount Scheme.

Martin Lewis has warned that come January 1, households that aren’t on fixed tariffs with high electricity use and low or no gas use will see bills rise by 3% or 4%.

To avoid the price increase, the Money Saving Expert founder is urging households to start checking price comparison websites now and find a cheap fixed tariff.

Writing in a post on X (formerly Twitter), Martin said: “The headline is @Ofgem’s energy Price Cap for the 3mths starting 1 Jan is to RISE 0.2% but that’s only part of the story, elec costs are to rise a real amount while gas falls, and yet again the hated standing charges are rising. Here’s the average UK direct debit rates: 

• Elec unit rates 27.69p/kwh (was 26.35p) up +5.1%
• Elec standing charges 54.75p/day (was 53.68p) up2.0%
• Gas unit rates 5.93p/kwH (was 6.29p) down 5.7%
• Gas standing charges 35.09p/day (was 34.03p) up 3.1%

“So those on the Price Cap (all those on standard tariffs, i.e. if you’ve not fixed or got a special deal) with high electricity use and low or no gas use will see their bills rise by three or four percent come 1 Jan.

“These changes are not caused by an increase in wholesale costs, as normal (which is why the prediction had been down 0.5%ish) as they went down over the three month assessment period, but by a mix of policy and network costs ie cost for nuclear, costs for linking up networks, cost of warm home discount.

“Electricity is seen as more universal so when they want to add policy costs to bills, they do it there, yet that is somewhat perverse as it means we see a relative increase in electricity costs compared to gas, when the whole policy driver is to move people off gas. 

“The best move for most people is to get onto a comparison site like http://cheapenergyclub.com and find yourself a cheap fix (though im hearing a couple of cheaper tariffs may launch next week so you may want to hold until then) which are currently 10% less than price cap (especially as april cap predicted to rise 4 to 5%). Also some good time of use and EV tariffs too.”

Ofgem said wholesale prices were currently stable and had fallen by 4% over the past three months, but that conditions remained “volatile”.

Tim Jarvis, director general of markets for Ofgem, said: “While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets.

“The price cap helps protect households from overpaying for energy. But it’s only a safety net and there are practical ways that customers can pay less for their energy.

“While wholesale energy costs are stabilising, they still make up the largest portion of our bills which leaves us open to volatile prices. That’s why we’re working with government and industry to boost clean energy and reduce our reliance on international sources we can’t control.”