Martin Lewis warns of price cap rise as bills climb again

The price cap will rise by £63 in October, the third increase this year. Martin Lewis has issued an urgent warning: households still on default tariffs could be paying hundreds more than necessary if they do not switch before the new cap takes effect next week. For a typical 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity, that means a total annual bill of roughly £1,717 from October, up from £1,568 in July.

As reported by the Daily Record, Lewis stressed that fixed deals have started reappearing after months of absence. Some offer rates 10-15% below the price cap, but the catch is that many come with exit fees of £50-75 per fuel. Homeowners need to calculate whether the upfront saving outweighs the penalty if they move or switch again.

Why this matters for your energy bills

Ofgem sets the price cap every three months, but it is a ceiling on unit rates and standing charges, not a total bill cap. The October rise reflects higher wholesale gas costs and increased network charges, about £24 extra per year on the average electricity bill alone. For households on prepayment meters, the increase is slightly lower, but still painful at roughly £1,668 annually.

The real issue is that many homeowners have not switched since the energy crisis began in 2021. Loyalty penalties are real: staying on the default tariff costs around £200 more per year than the cheapest fixed deal available today, according to comparison sites. Lewis’s warning is timely, the window to lock in a lower rate before the cap rises is closing fast.

What this means for your EPC and home upgrades

Switching tariffs is a short-term fix. The long-term solution is reducing how much energy you use in the first place. A home with an EPC rating of D or E uses roughly 30-50% more energy than one rated C or above. The Energy Saving Trust estimates that loft insulation (costing £300-£600) can save £200-£300 per year on heating bills. Cavity wall insulation (£500-£1,500) saves around £250 annually.

Solar panels, heat pumps, and double glazing are bigger investments but offer greater returns. A typical 4kW solar panel system costs £6,000-£8,000 and can cut electricity bills by £400-£600 per year, depending on usage and export tariffs. The government’s Boiler Upgrade Scheme grants £7,500 for heat pumps, but installation costs still range from £7,000-£13,000. Even so, with the price cap rising repeatedly, payback periods are shortening.

But, and this is the editorial point, most households cannot afford these upgrades upfront. The government’s Great British Insulation Scheme has been slow to roll out, with only 50,000 homes upgraded in its first year against a target of 300,000. The ECO+ scheme offers free or subsidised insulation for low-income households, but eligibility is narrow. Meanwhile, the price cap keeps climbing.

What you should do before 1 October

First, check your current tariff. If you are on a standard variable rate, compare fixed deals on Ofgem-accredited comparison sites. Look for no-exit-fee deals or those with fees lower than the expected saving. Second, check your EPC rating on gov.uk, if it is D or below, investigate grants for insulation through the Energy Saving Trust’s postcode tool.

Third, consider a smart meter if you don’t have one. It gives real-time usage data and helps you shift consumption to off-peak hours, which can save 5-10% on electricity bills. Finally, do not ignore the standing charge, it has risen to 60p per day for electricity in many regions, accounting for £219 per year irrespective of usage. Reducing usage alone won’t fix that, but switching to a tariff with a lower standing charge might.

Households on standard variable tariffs should switch before 30 September to lock in current rates. Eligibility for government insulation schemes closes when funding runs out, apply now. The next price cap review is in January 2025, and analysts expect another rise. The time to act is before the clock ticks over to October.