Martin Lewis: Energy Price Cap rise means almost all pensioners need to fork out more than last year

Ofgem has just announced that the new Energy Price Cap for consumers from 1 October to 31 December 2024 will rise from £1,568 a year to £1,717 a year for a household with typical use. Martin Lewis, founder & chair of MoneySavingExpert.com, comments on the overall picture, the issue for pensioners, and what people should do…

“Prices nearly double pre-crisis: This rise means this winter many will still be paying nearly double what they were pre-crisis. From 1 October, the vast majority of homes in England, Scotland & Wales will see costs jump 10% – so for every £100 you pay today, you’ll typically pay £110. To be more accurate, as most of the rise is on the unit rate not the standing charge, higher users, especially those with gas, will overall see their costs rise by more than 10%, lower users less.

“The Government must rethink Winter Fuel Payments or almost ALL pensioners will need to find £100s more than last winter: While energy will cost less than during last winter’s crisis time, the reduction in rates compared with last year only equates to a drop of roughly £100 over the six winter months for a household with typical usage. Yet specific pensioner energy support has dropped by far more... Last year, pensioner homes got up to £300 extra per household cost of living support – that’s gone, and its loss alone is far bigger than the saving made by slightly lower rates. Piling on top of that is the Government’s new decision to means-test Winter Fuel Payments, that will leave all except usually those who claim Pension Credit missing out on a further £200 to £300. While there’s a strong argument for ending the universality of Winter Fuel Payments, eligibility is being squeezed to too narrow a group. Those just above the thresholds will be hardest hit. I’m due to meet the Chancellor in a couple of weeks, and will then be urging her to look at methods to widen eligibility – such as to homes in council tax bands A to D – an imperfect but workable proxy for lower household incomes.

“People can and should save by switching: The cheapest year-long fixes on the market right now are about 7% LESS than the new October Price Cap, but they mightn’t be around long. That looks a good deal, as it’s currently predicted once rates go up they won’t come down. Don’t just jump on any fix though – if you’re going to lock in you want to grab the cheapest for your use and location, so use a whole-of-market comparison, like MSE’s Cheap Energy Club, and find out who will let you fix for less. Alternatively, deals like E.on Next’s Pledge, or EDF Ensure are effectively discounted trackers, where they move with the Price Cap, but the unit rates or standing charges are guaranteed to be lower. And for more sophisticated energy users, the Octopus Agile and Tracker tariffs, where prices move rapidly, can be far cheaper.

“Consultation to reduce standing charges launched: The standing charge is a daily poll tax that means everyone with gas & electricity will pay an average £338 a year from October, even if they don’t use it. This moral hazard penalises lower users, often many who are vulnerable, and means they will face a proportionately larger rise. I’ve long called for change, so welcome today’s long-promised consultation on reducing standing charges – though I’m slightly disappointed even the maximum proposed reduction is only £100/yr – but I'll hold judgement until I've read the consultation in full.”

Please see MSE's latest news story for full details.

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