URGENT Energy price cap update: everything you need to know to beat the increase!

**Martin Lewis** (0:30)
On the 1st of October.
In a moment, I'll play you the interview I did reacting to the news on Five Live, where I go through the big picture of what to look at. But before we get to that, I want to give you podcast listeners a little bit more granular detail of what's really happening.
So, the headline figure is the price cap on the 1st of October that dictates the price that those people in England, Scotland, and Wales on standard tariffs pay is to rise by 3.6 percent. The main reason for that rise is wholesale rates. The October price cap is based on average wholesale rates for the period from the middle of March to the middle of August, and they have been high due to the Middle East conflict. But there's another factor in here that is on the 1st of October, the same date the new price cap starts, the government has also scrapped VAT on domestic electricity, only electricity, not gas, and that will only last 6 months. So those two things have to come together. Now, those people who aren't on price caps, such as those who are on fixes, you're going to see that electricity VAT cut on the 1st of October. Your bill is probably going to be on average around 2.5, 2.6 percent less than it is right now, because remember, it's only electricity, and you might have some gas going in your energy bills. But I want to talk to you about the cumulative effect of all of that the price cap. The headline figure is 3.6 percent. Here's what's really happening. The average domestic UK price cap rate for those on direct debit, and it does depend what region you're in, and it does depend how you pay. But let me just give you this idea. The new electricity unit rate is 26.3 pence per kilowatt hour. So that's up just under 1 percent. The new electricity standing charge on average is 54.8 pence per day. That's down 4.1 percent. Now, the reason those aren't going up that much is because of that VAT cut, and the standing charge is coming down. So if you are an electricity-only user, then you're likely to either see a small rise, or if you're a very low user, you could actually see a slight fall coming in October.
The gas unit rate though is where the really big hike is coming on board. The new gas unit rate on average is 7.97 pence per kilowatt hour. That's up nearly 9 percent, and the gas standing charge is 29.68 pence per day. That's up 2.2 percent. So if you use a lot of gas, you are likely to see a big rise, and probably bigger than the headline, 3.6 percent average rise that's coming out.
Now, having given you that little bit of nitty-gritty nerdy stuff for the podcast, I think it's probably time we go into the Five Live interview that I did with Rachel Burden not long after the new price cap was announced.

**Rachel Burden** (3:21)
Right. It is Five Live breakfast. And the other big news domestically today is that the energy regulator Ofgem has announced that its price cap is going up in October. We were expecting this reaching a three-year high. The limit, which applies to households in England, Scotland and Wales, which are not on fixed tariffs, will see typical bills increase by 60 pounds a year. So let's talk now to Martin Lewis, founder of Money Saving Expert, and of course, host of Five Lives Martin Lewis Podcast. How are you this morning, Martin? We were expecting this figure, weren't we? But does it mean to say it won't still hit some people hard?

**Martin Lewis** (3:52)
No, I think the really big thing to remember is we were on, in July, we got the announcement of a 12.6% rise in the price cap. At the time, the mitigation was, that was over the low use summer period. Well, this 3.6% rise that we're seeing today is on top of the 12.6%, which means prices are nearly 17% higher once we get to the 1st of October for those on the price cap than they were back in April. And now we're going into the winter period. And if you want to be really depressing, because wholesale rates, those that gas and electricity companies pay, are so high right now. In fact, this week, they're higher than they've been at any point since the middle of the Ukraine crisis. The current prediction is we're looking at at around a 10% rise again in January, which is why people do need to act. Sorry, Rachel, you know, I always become a nerd and pick you up on these things. Forgive me.