How to avoid energy price cap increase: Martin Lewis says do one thing “right now” but includes “three warnings”

It was announced earlier today (February 25) that the energy price cap would be going up again - this time by 6.4%. Thankfully, Money Saving Expert Martin Lewis is on hand offering advice on how to avoid the jump in prices this April.

Ofgem said the increase to the price cap, which will raise the average bill for households in England, Scotland and Wales on a standard variable tariff from the current £1,738 a year to £1,849, followed a recent spike in wholesale prices.

The rise will equate to £111 for an average household per year, or around £9.25 a month, over the three-month period of the price cap. This is 9.4% or £159 higher than this time last year but £531 or 22% lower than at the height of the energy crisis at the start of 2023.

Ofgem chief executive Jonathan Brearley said: “We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households. But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.”

In what Martin described as an instant 'heads-up on what's going on financial guru explained what he advised people to do straight away to beat the price hike. In a video posted to his website, he urged consumers on 'standard' or 'flexible tariffs to "get off now". He said: "So, first thing, what is the price cap?

“Well, it is the maximum amount that energy firms can charge for the daily standing charge and unit rates on their standard tariffs - the default tariff that you're on if you've never switched or if you've come off a fix and you've not done anything. You'll know you're on one, it'll tend to be called a standard variable or a flexible tarriff. And if you are on a price cap tariff it's a pants cap. If you possibly can, you want to get off it, get off it quickly and fix."

Martin added that, right now, the cheapest fixed rate tariffs are 4% below the current price cap, but in April, that price cap is going up by 6.4% so will represent even better value if you lock in a deal now. He said: “On the current predictions you can fix now and save money and you can certainly save substantially once it goes up in April. So what you want to do is do a whole of market comparison to find your cheapest fix, because your cheapest fix depends on where you live and how much you use.”

He also offered caution when choosing a deal, saying: “Three warnings about that though. Number one, depending on when you're watching this (this is recorded on Tuesday morning the 25th of February), I wouldn't do a comparison until three or four this afternoon because I'm hearing some cheaper fixes will be coming in. So I would wait because you may be able to get a cheaper deal if you wait a little bit.

“Second, remember when you compare, the saving you will see is compared to the current price cap. So it might only be £30 or £40, but in reality, that price cap is going to go up so compared to what you would pay if you did nothing, once it goes up in April, the saving will be far bigger and it is still worth fixing.

“And third, remember most comparison sites hide tariffs that don't pay them, by default, so you have to find a little button and click 'show me all tariffs' if you want to see them. Or even better, you could just use my moneysavingexpert.com Cheap Energy Club comparison that automatically shows you all the tariffs.”

Ofgem said four million customers have moved to a fixed tariff since its last price cap announcement in November, taking the total to 11 million, meaning those people will not be affected by the increase. This was the largest movement of customers coming off the price cap and on to a fixed deal since the energy crisis, the regulator said.