Martin Lewis Warns on Ofgem’s New Energy Charge

Ofgem is consulting on a new energy charge that would land on every household bill, and Martin Lewis has said publicly that he doesn’t like it. The consumer champion’s warning, reported by The Bolton News, comes as the energy price cap continues to squeeze household budgets. Separately, Yahoo Finance UK reports Lewis explaining how households can avoid the full impact of the latest cap hike. The two stories point to the same underlying problem: the standing charge, the fixed daily amount you pay before using a single kilowatt-hour, is becoming a bigger share of the bill, and Ofgem’s proposed new charge would add to it.

What Ofgem is actually proposing

Ofgem has not published final details, but the direction of travel is clear. The regulator wants to shift more network and policy costs into fixed charges, spread evenly across households. That means a low-use home, a retired couple, a flat, a well-insulated 3-bed semi, pays proportionally more, while a high-use home pays proportionally less. Lewis’s objection, as reported by The Bolton News, is that this penalises the households who have already done the right thing by cutting their consumption.

The numbers matter. A typical 3-bed semi uses around 2,700 kWh of electricity and 11,500 kWh of gas a year. Under the current cap, standing charges for dual fuel run to roughly £300 a year before any usage. If Ofgem moves more costs into fixed fees, that figure could climb by £50–£100, depending on the final design. For a household that has already installed loft insulation and a heat pump, the fixed charge becomes the dominant cost, and there is nothing they can do to reduce it.

Why Lewis is telling households to fix now

Yahoo Finance UK reports that Lewis is advising households to consider fixing their tariff before the next cap change takes effect. The logic is straightforward: if you fix today, you lock in the current unit rate and standing charge for 12 months, shielding you from whatever Ofgem announces. But the advice comes with a caveat. Fixed tariffs typically carry exit fees of £50–£75 per fuel, and if wholesale prices fall, as they did briefly in 2024, you could end up paying more than the cap.

The catch is that fixing only protects you from price rises, not from the structural shift towards fixed charges. If Ofgem redesigns standing charges, even a fixed tariff will reflect the new structure at renewal. Households that fix now are buying time, not immunity.

What this means for a typical 3-bed semi

Take a family in a 3-bed semi in Bolton, using 2,700 kWh of electricity and 11,500 kWh of gas. Under the current cap, their annual bill is roughly £1,900. Of that, around £300 is standing charges. If Ofgem’s new charge adds £80 to the fixed element, their bill rises to £1,980, a 4% increase that has nothing to do with how much energy they use.

For that household, the most effective response is not switching supplier but cutting demand. Loft insulation to 300mm costs around £400 and saves £150–£250 a year on gas. Cavity wall insulation costs £500–£1,000 and saves £200–£350. Both are eligible for support under the Energy Company Obligation (ECO4) if the household meets income or EPC criteria. A heat pump, supported by the Boiler Upgrade Scheme‘s £7,500 grant, removes gas standing charges entirely, a saving of around £120 a year before any efficiency gain.

Solar panels with a battery, meanwhile, cut the electricity you buy from the grid. A 4kW system costs £6,000–£8,000 and generates around 3,400 kWh a year, more than a typical semi uses. That does not reduce the standing charge, but it reduces the unit rate you pay on every kilowatt-hour, which is where the real long-term saving sits.

The EPC angle that Ofgem’s plans miss

Ofgem’s consultation focuses on how costs are shared, not on how they are reduced. That is a gap. The government’s own impact assessment for the Future Homes Standard estimates that raising a home from EPC D to EPC C cuts energy bills by around £300 a year. For a 3-bed semi, that is a bigger saving than any tariff switch.

Households in EPC D or below should check eligibility for the Home Upgrade Grant (HUG2), which funds insulation and low-carbon heating for off-gas-grid homes. The grant closes to new applications in March 2027, so the window is narrowing. For those on the gas grid, the Boiler Upgrade Scheme offers £7,500 towards a heat pump, but only if the home meets insulation standards, which is why fabric-first upgrades matter.

What to do before the next cap announcement

Households on standard variable tariffs should compare fixed deals now. Use a comparison site that includes exit fees, and check whether your supplier offers a loyalty fix. If you are on a low income or receive means-tested benefits, check eligibility for ECO4 and HUG2 through your local authority or a registered installer.

For the longer term, book an EPC assessment if yours is older than five years. An EPC C is the minimum threshold for most grants and for future rental rules. The assessment costs £60–£120 and tells you exactly which measures will cut your bill most. Then apply for the relevant grant before the March 2027 deadline. The standing charge is moving in one direction, up, and the only way to offset it is to use less energy, or generate your own.