Martin Lewis warning of Energy Price Cap rise announcement

The Ofgem quarterly energy price cap update for the period from April 1 to June 30 2025 is due tomorrow, and the Money Saving Expert founder is urging bill payers to check the best deals before the announcement.

On his X account, he said: “Energy Price Cap rise of likely 5-7% to be announced tomorrow.”

ENERGY PRICE CAP RISE OF LIKELY 5-7% TO BE ANNOUNCED TOMORROW

The boss of regulator @Ofgem will be joining me tomorrow at 8pm on @itvMLshow live – don’t miss it. If you’ve QUESTIONS to suggest for him or me on energy bills, just post by reply.

— Martin Lewis (@MartinSLewis) February 24, 2025

What is the energy price cap?

The term is quite confusing and it’s important to note it’s not the maximum price you will pay – it’s an average. If you use more, you will pay more.

The cap was introduced on 1 January 2019 by regulator Ofgem, with the aim of preventing the millions of households on expensive variable tariffs from being ripped off.

But it only limits what you pay for each unit of gas and electricity that you use.

It’s based roughly on wholesale energy prices (those that firms pay) and applies only to providers’ standard and default tariffs, which the vast majority of households are now on.

On 1 January 2025, the Price Cap rose by 1% to £1,738 a year for a typical use household paying by Direct Debit.

Rises of between 5-7% would take that figure to between £1,824-£1,859 a year, and that’s just for average usage – higher users will pay much more. 

The energy price cap is the maximum amount energy suppliers can charge you for each unit of energy and standing charge if you’re on a standard variable tariff.

The energy price cap also sets a maximum daily standing charge.

What is a standing charge?

Standing charges are applied daily, regardless of how much energy the customer uses, and are used to cover the cost of supplying energy to homes and businesses.

They also cover the costs of building new network infrastructure and keeping the power on when energy suppliers go bust.

But campaigners say they are unfair because everybody pays the same rate, meaning they make up a far higher proportion of bills for people using less energy.

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In future, Ofgem says energy suppliers may be made to offer tariffs with low or no standing charges, allowing customers to pay the costs as part of their unit rate instead, under plans from regulators.

Ofgem said it is consulting on bringing in the option under the price cap that would cover so-called zero standing charge tariffs, but sadly not in time for this price rise.

The watchdog said it wants the tariffs to be available in time for winter 2025.

Charlotte Friel, director for retail pricing and systems at Ofgem, said: “We know from the huge response we’ve had that many feel standing charges are unfair.

“However, we also know that vulnerable, high-energy users – including those who rely on medical equipment at home or low-income families in poorly insulated houses – would suffer disproportionately if these costs were added to the unit rate for everyone.

“That’s why we’re moving forward with plans that will give customers a choice and more control over how they choose to pay for their gas and electricity.”

The consultation comes after Energy Secretary Ed Miliband urged Ofgem to crack down on rising costs.

Martin Lewis has also commented on the issue: “This is progress. Standing charges are by far the most complained-about part of an energy bill.

“It costs in excess of £300 a year just to have the facility of gas and electricity, even if you don’t use any.

“They’re a moral hazard that disincentives lower users from cutting their bills, and leaves many older people, who only use gas for heating in the winter, still paying for it every day in summer.”

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