UK households are bracing for another financial blow as Ofgem confirms a new energy price cap increase of 2% in October. The average annual domestic bill will rise from £1,720 to £1,755, adding more pressure to already stretched family budgets.
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What Happened?
On Wednesday morning, the energy regulator Ofgem announced that the price cap will increase this autumn. The cap sets the maximum amount energy suppliers can charge households on standard variable tariffs, which apply to most UK homes.
Ofgem stated that the increase is lower than inflation, but acknowledged that many households are still struggling with rising costs.
Martin Lewis’s Advice
Money-saving expert Martin Lewis has urged households to review their current energy deals and consider switching to fixed tariffs. According to Lewis, some fixed-rate deals are currently up to 15% cheaper than the new price cap, potentially saving consumers around £250 per year.
Lewis wrote on social media:
“Now we know that the cap is very likely to stay at its current level, or slightly higher, by the end of 2025, it’s easy to compare the cheapest fixed deals.”
“It’s not worth waiting for a big drop in wholesale rates—no one is predicting that.”
Best Energy Suppliers Offering Fixed Deals
According to Martin Lewis, these energy providers currently have competitive fixed tariffs:
- Outfox Energy – Up to 14.8% below the cap (Exit fee: £75 per fuel)
- Fuse Energy – 12.7% below the cap (Exit fee: £50 per fuel)
- Ecotricity – 10.5% under the cap (Exit fee: £75 per fuel)
- Octopus Energy – 3.4% under the cap, no exit fee (Flexibility if rates drop later)
While some deals offer significant savings, most come with exit fees. Octopus Energy stands out for its flexibility, as customers can switch later without penalties.
Ofgem and Government Response
Tim Jarvis, Director General of Ofgem Markets, advised households to compare fixed tariffs and consider direct debit or smart pay-as-you-go methods, which can also reduce costs.
Meanwhile, Labour criticized the previous Conservative government for overreliance on foreign fossil fuels, blaming it for high UK energy prices. A Labour spokesperson warned that Nigel Farage’s opposition to clean energy could worsen the crisis, threaten jobs, and harm energy security.
What Happens Next?
Experts predict that wholesale energy prices are unlikely to drop significantly soon, meaning fixed deals may remain better value than sticking with the price cap. Consumers should weigh potential savings against exit fees before switching.
Conclusion
The upcoming Ofgem price cap increase will hit household budgets once again, but switching to the right fixed tariff could save hundreds of pounds annually. With no major drop in energy prices expected, now may be the time to act and lock in a better deal.
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