Ofgem CEO and Martin Lewis share tips to reduce energy bills
With the energy price cap rising, families are looking at ways to reduce their average energy bill.
What is the energy price cap?
The energy price cap has risen by £149 for October 1 2024 to the end of December 2024 and means the average energy bill stands at £1,717.
Remember this doesn't mean your energy bills are capped at £1,717! The energy price cap sets a limit of how much suppliers can charge for each unit of gas and electricity.
Ofgem then uses the average energy use of a typical home (two-three bed house with two-three people) to calculate a figure which is easier to understand for consumers.
Why are energy bills rising?
Tensions in the Middle East, the war in Ukraine, and extreme weather have pushed up the price of wholesale energy, Ofgem's chief executive Jonathan Brearley said.
NimbleFins researchers looked at natural gas futures prices which indicate where the market is likely to go.
They look to be relatively stable compared to 2021 and 2022, but there are still some slight fluctuations in our charts, which you can see here.
Erin Yurday, CEO and co-founder of NimbleFins said: "Natural gas is the largest contributor to UK electricity generation, so natural gas prices have a big impact on electricity prices, in addition to gas prices.
"By looking at the January 2025 natural gas futures we get an idea of what prices are expected to be in winter, e.g. if they're expected to rise or fall from here." Indeed the January 2025 futures are higher than the historical prices a year earlier.
They appear reduce very slightly in July 2025, showing UK households are unlikely to see much movement on their energy bills through 2025.
How to reduce energy bills
Ofgem urged people to check if they're entitled to any benefits which can unlock support for energy bills as well as the wider cost of living.
With the Winter Fuel Allowance being cut for those not on Pension Credit or other similar benefits, older people are particularly encouraged to see if they are entitled. It's estimated 880,000 people are not claiming the benefit despite being eligible.
Ofgem's chief executive also urges all households to "shop around" for the best energy tariffs, saying there are finally some good discounts to be had.
He said: "For the first time in a long time, we are seeing some good value deals emerge.
"I'd encourage people to shop around and consider fixing if there is a tariff that's right for you - there are options available that could save you money, while also offering the security of a rate that won't change for a fixed period."
MoneySavingExpert's founder Martin Lewis said there were deals on the market offering prices about nine percent cheaper than the price cap.
He wrote on X: "It's time to rename the energy price cap, the energy pants cap.
"No one, who's capable of switching, should be on it right now. You can either:
- Fix at 9% less than the cap
- Get a discounted tariff (ie. price cap but cheaper)
- Get a special EV tariff
- Sophisticated users can go for Octopus Agile/tracker tariffs with rapid price moves."
Earlier he cautioned that deals this good might not be around for long.
Emily Seymour, energy editor at Which?, said there was no "one size fits all" approach to locking in a fixed tariff because doing so may not be right for everyone.
She added: "You should compare what your monthly payments would be on a fixed deal with what you'd expect them to be if you remain with the price-capped variable tariff to see what the best option is for you.
"As a rule of thumb, we'd recommend looking for deals around the price of the current price cap, not longer than 12 months and without significant exit fees."
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