Martin Lewis on new Energy Price Cap: "Electricity costs are rising, while gas falls, and yet again the hated standing charges are rising"

Today, the energy regulator Ofgem has announced that the Price Cap will rise by 0.2% from 1 January 2026. Please see MSE's live news story for full details on the change and what this means for energy bills.

Reacting to the announcement, Martin Lewis, founder of MoneySavingExpert.com, said: "The headline is Ofgem's energy Price Cap for the 3mths starting 1 Jan is to RISE 0.2%, but that's only part of the story. Electricity costs are to rise a real amount while gas falls, and yet again, the hated standing charges are rising. Here's the average UK direct debit rates:

- Elec unit rates 27.69p/kwh (was 26.35p) up +5.1%

- Elec standing charges 54.75p/day (was 53.68p) up2.0%

- Gas unit rates 5.93p/kwH (was 6.29p) down 5.7%

- Gas standing charges 35.09p/day (was 34.03p) up 3.1%

So those on the Price Cap (all those on standard tariffs, ie if you've not fixed or got a special deal) with high electricity use and low or no gas use will see their bills rise by three or four percent come 1 Jan.

These changes are not caused by an increase in wholesale costs, as normal (which is why the prediction had been down 0.5%ish) as they went down over the three month assessment period, but by a mix of policy and network costs ie cost for nuclear, costs for linking up networks, cost of warm home discount.

Electricity is seen as more universal so when they want to add policy costs to bills, they do it there. Yet that is somewhat perverse as it means we see a relative increase in electricity costs compared to gas, when the whole policy driver is to move people off gas.

The best move for most people is to get onto a comparison site like http://cheapenergyclub.com and find yourself a cheap fix (though I'm hearing a couple of cheaper tariffs may launch next week so you may want to hold until then) which are currently 10% less than price cap (especially as April cap predicted to rise 4 to 5%). Also some good time of use and EV tariffs too."

On policy costs on electricity bills, Martin Lewis, founder of MoneySavingExpert.com, said: "We have to question why we lump all these policy costs on electricity bills - Warm home discount, debt forgiveness, renewables (I know some question the policies themselves but that's another matter).

Its these policy costs that are now the key driver of predicted future price rises (up 5% in April is the current prediction) and are making an ever bigger chunk of energy bills.

Putting them on electricity bills is regressive compared to putting them into general taxation - and is policy perversion for a govt trying to get people to ditch gas (which due to this is getting relatively cheaper).

We know the investment being made in the network and renewables is likely to keep adding costs until the mid 2030s, we need to start thinking about the reality of that now, and how it is paid for."