**Martin Lewis Urges Caution After Ofgem Announces New Energy Price Cap**
Households across the UK are set to see a fall in their energy bills this summer, following the latest announcement from Ofgem regarding a reduction in its energy price cap. However, financial expert Martin Lewis has warned that consumers should treat the news with caution and has provided critical insight into what the change really means for everyday households.
On Friday, Ofgem revealed that from 1 July, the energy price cap will decrease by 7%, moving from its current level of £1,849 to £1,720 annually for the typical dual-fuel, direct debit customer. This is equivalent to a saving of £129 over a full year for millions of households. However, Lewis, who is widely recognised for his practical money-saving advice, has described this reduction as “nothing to shout home about” and urged people not to overestimate its impact.
Lewis explained that the price drop only reverses the rise that took place in April, bringing bills back to roughly their previous levels at the start of the year. He pointed out, “For every £100 you pay for energy now, in July, August and September you will typically pay roughly £93.” Nonetheless, Lewis highlighted that energy bills this July will still be approximately 10% higher than at the same time last year, offering a stark reminder of the ongoing pressure on household budgets.
The consumer champion also stressed that the quoted annual figure is not an upper limit; it is based on an average household’s usage. Those who use more energy will pay more, while those who use less will pay less. He has encouraged households, particularly those not on pre-payment meters, to actively seek a better deal rather than simply accept the cap. Lewis advises using whole-of-market comparison tools to check if fixed deals now available would undercut the new price cap, potentially providing immediate savings.
According to analysis from Lewis and his MoneySavingExpert team, fixed-rate tariffs currently offered by some suppliers can result in bills as much as 18% below the current price cap. “It’s time to get off the cap,” Lewis said, suggesting that locking in a lower fixed price now could beat the cap through every period in the coming year, depending on analysts’ predictions.
Importantly, Lewis warned households that price comparison sites are currently measuring possible savings against the present price cap, not the lower cap that comes into effect in July. This means users may see savings figures that are exaggerated by around 7%—a crucial point for anyone considering a switch, as the true difference may be less once the July rate is in play.
Breaking down the numbers, Lewis noted that both unit rates and standing charges will drop from July. Typical electricity charges will fall by about 4.5% for the standing charge and 4.8% for the unit rate. Gas charges will decrease by 8.7% for the standing charge and 9.4% for the unit rate. Households that use more gas than electricity could see slightly greater reductions in their bills as a result.
Lewis also reminded consumers that while the cap was originally intended as a back-stop for those unable to switch, it now sets the rate for about 65% of British homes. Given the potential for higher savings with fixed tariffs, he emphasised that most people should consider moving away from the capped rate unless they are on a pre-payment meter, where choices remain limited.
In summary, while the July energy price cap reduction brings some short-term relief, Martin Lewis argues it does little to alleviate the enduring higher costs facing households since last year. Savvy consumers are advised to stay proactive, make use of comparison tools for the best deals, and be mindful of how ‘saving’ calculations may be inflated until new tariffs are more widely published.
For those wishing to assess their individual circumstances, Lewis recommends using online tools such as those provided by MoneySavingExpert, which can offer tailored calculations of the new cap’s effect.
With energy prices still a prominent concern for millions, the coming months will test the public’s willingness to seek savings and navigate the ever-changing tariffs in the market.