Ofgem’s latest price cap adjustment will push typical annual bills to £1,717 from January, but Martin Lewis warns the change is ‘significantly higher’ for some households. The money-saving expert told The Mirror that the way standing charges and unit rates are being recalibrated will land hardest on prepayment meter users and homes with high winter consumption. For a typical three-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity, the increase could exceed £120 a year, according to Lewis’s calculations.
As reported by The Mirror, the change stems from Ofgem’s decision to shift more of the network cost burden onto standing charges, the fixed daily fee every household pays regardless of usage. That flat rate is rising from about 60p to 65p per day for electricity, and from 28p to 31p for gas. For a home on a prepayment meter, already paying higher standing charges, the combined effect could be a £90–£120 annual jump.
Who qualifies, and who doesn’t
The new cap applies to all households on standard variable tariffs, about 28 million homes. But the pain is not evenly spread. Prepayment meter users, who are disproportionately low-income and often in poorly insulated homes, face the steepest absolute rises because their standing charges are already higher. Homes with electric heating or older boilers that use more gas in winter will also see bigger bills, since the unit rate for gas has been nudged up by 0.5p per kWh.
Households with smart meters and time-of-use tariffs may escape some of the hit by shifting usage to cheaper overnight periods. But those without smart meters, around 12 million homes, are locked into the standard rate structure. The Energy Saving Trust estimates that a home with electric storage heaters could see an extra £150 a year under the new cap, though Ofgem disputes this figure.
What it costs a typical 3-bed semi
For a typical semi-detached house using 12,000 kWh of gas and 2,900 kWh of electricity, the new cap works out at roughly £1,717 annually. That is £94 more than the current cap of £1,623. But the breakdown matters: standing charges now account for £334 of that total, up from £310. The unit rate for electricity stays at 24.5p per kWh, while gas rises to 6.2p per kWh.
The catch is that these figures assume average usage. A home with poor loft insulation or single glazing will use more energy to stay warm, pushing the effective cost higher. The government’s Great British Insulation Scheme offers grants for cavity wall and loft insulation, which can cut heating bills by £200–£400 a year. But take-up has been slow, only 50,000 homes have applied since the scheme launched in 2023.
How to fight back before January
Households on standard variable tariffs have until the new cap takes effect on 1 January to switch to a fixed-rate deal. Fixed tariffs currently average £1,650, about £67 less than the new cap. Martin Lewis recommends checking comparison sites like Uswitch or MoneySavingExpert for the best deals. But switching is only part of the answer.
Installing a smart meter gives you real-time data on usage, which can help you cut waste. The government’s Boiler Upgrade Scheme offers £7,500 towards a heat pump for homes in England and Wales, which can reduce heating costs by 30–50% compared to a gas boiler. For those who cannot afford a heat pump, simple draught-proofing and radiator reflector panels cost under £50 and can save £60–£100 a year.
Households on prepayment meters should contact their supplier about the Warm Home Discount, a £150 rebate for low-income customers. Applications open in October. The clock is ticking: the new cap arrives in January, and the cheapest fixed deals are disappearing fast. Check your tariff today, and if you are on a standard variable, switch before Christmas.
Frequently Asked Questions
Not necessarily. If you are on a fixed tariff, the cap does not apply until your deal ends. But for the 28 million households on standard variable tariffs, the cap sets a maximum unit rate and standing charge. Your actual bill depends on how much energy you use. Homes that use less than the typical 12,000 kWh of gas may see a smaller increase, while those with electric heating or poor insulation could see a bigger jump.
The quickest fix is to switch to a fixed-rate tariff now, before the cap rises. Use a comparison site to find deals under £1,650. For longer-term savings, improve your home's insulation, the Great British Insulation Scheme offers free or subsidised cavity wall and loft insulation for eligible households. Installing a smart meter also helps you identify waste and shift usage to cheaper times if you are on a time-of-use tariff.
