Martin Lewis urges UK households to carry out this 1 task now to save 10% on bills ahead of the October energy price cap hike

Martin Lewis has taken to social media to explain how we can beat rising energy costs before the recently inflated price cap comes into effect on 1 October this year.

This Thursday (26 August), the energy regulator Ofgem announced that the energy price cap would rise by 4% in October, costing the average household an extra £60 a year on their bills.

In true Martin Lewis style, the money expert quickly took to X (formerly Twitter) to explain how consumers can offset rising costs - and it’s as simple as fixing your tariff. Here’s everything you need to know.

Should you fix your tariff?

‘So if you are on the price cap and you’re going to see a rise, what do you do about it? Well, the obvious thing here is that you get a fix. And you get the cheapest fix you possibly can, and this is why,’ says Martin in a video on X.

‘The cheapest fix on the market is around 7% less than the current price cap. Well, if you fix, you lock in that unit rate and standard charge. So, the price cap is going to go up 3.6% in October, so from October expect the cheapest fix to be around 10% cheaper than the rate you’ll be paying from October if you stayed on the price cap.

‘And the current prediction because wholesale rates, which is what’s driving this, the Middle East conflict, the fact that that fighting has gone on and on and in fact, wholesale rates, the rates gas and electricity firms pay, are the highest right now that I’ve seen them since the Ukraine crisis, means that in January, well the price cap is currently predicted though it’s somewhat crystal ball gazing to be going up by another 10%.

‘So by January, the cheapest fix now could potentially be 20% cheaper than what you’ll be paying in January. That’s why a fix is a no-brainer.’

If wholesale prices continue to rise, it’s likely that the price cap will follow suit. Martin’s logic is that by fixing your tariff now and paying the same price for the length of your contract, you will save more money in the long run.

‘Generally speaking, comparing energy providers and switching to a fixed tariff now will likely be the best way for most customers to save on their energy bills, especially for those on a variable tariff who are more exposed to changes in the price cap,’ confirms Gareth Kloet, energy expert at Go.Compare.

‘Doing this will lock your prices at the unit rate you fix at for the duration of your contract, so you will avoid paying the higher prices when they come into effect in October. The amount you could save by doing this will vary by customer, depending on your current deal and energy usage, but it should protect you against the incoming rise at the very least.’

Are there any issues with fixing your tariff right now?

However, while fixing your tariff is generally considered by experts as a good way to save on your energy bill (particularly when prices are expected to rise), there are still a few niggles that you should consider.

‘The only thing for customers to be mindful of when making this switch is to take exit fees into account if you are currently on a fixed rate tariff. You may be charged a fee to leave your current deal and switch to another tariff with another provider, so it can be worth double-checking that this fee won’t outweigh the savings of moving to a fixed tariff,’ says Gareth.

‘Switching to a fixed tariff also means you won’t feel the benefit if prices drop below the current unit rate during your contract, but you will have the stability of knowing your energy costs will remain the same and that you’ll avoid any higher prices for the immediate future.’

In his video, Martin also explains that the cheapest fixed-rate offers are currently more expensive than they were last month due to increasing wholesale prices.

‘And if the Middle East conflict improves, you may be able to fix more cheaply in three, four, five weeks than you can right now. But nobody knows because it’s all about the big orange fella in the White House and what he decides to do.’

Martin concludes by saying that the safest thing to do if you’re on the price cap is to fix today. However, he does say if you’re the type of person who plays the market or is just coming off a fix, there is a chance that you may be able to wait for a cheaper fix.

There are plenty of ways to save energy at home, such as using energy-efficient bulbs and smart meters and making simple changes like not overfilling the kettle. If you are worried about paying your bills this winter, you should reach out to your energy supplier to see what support you’re entitled to.