Today (Oct 1) Ofgem’s energy price cap has risen for the winter, with customers now facing a £149 yearly increase on average.

Households now face higher energy bills as winter approaches.

The cap has increased from £1,568 to £1,717 – an increase of 10%. 

Martin Lewis has weighed in on the price cap increasing, calling the UK’s energy market “perverse" on Twitter / X.

Yesterday, he said: "Why energy prices will RISE tomorrow even though wholesale rates have dropped over the last month... Our energy market is perverse.

"Tomorrow 1 Oct the energy Price Cap, which dictates the rate 8 in 10 Eng, Wales, Scot homes pay, rises by 10% - meaning bills do to. Yet wholesale rates, those energy firms buy at, have dropped in recent weeks (tho up slightly in last few days) evidenced by the fact the switchable deals being offered have got cheaper.

"The reason for the disjoin is that the Price Cap mechanism is time-lagged. Each Cap is fixed for three months, the new 1 Oct to 31 Dec cap is based on mid-May to mid August's wholesale rates, and they peaked in August.

"You'll need to wait until January for the recent falls to be factored in, which is why the Cap is predicted to drop, slightly then (a few weeks ago it was though it'd rise). It's only slightly because its an averaging over time while current switchable deals can take advantage of short term dips.

"So on a practical note if you act (do a comparison - MSE energy club is whole of market) you can take advantage of lower rates, if not you'll pay more due to the time lag system and have to hope wholesale rates stay low the next few weeks in order to see a drop in January Price Cap.

Recommended reading:

Martin Lewis shares warning to Brits with savings accounts

Martin Lewis issues warning to low-income pensioners on GMB

Martin Lewis issues urgent £300 Winter Fuel Payment warning

"A few more Price Cap notes... i) While it's called a Cap, there is NO CAP on what you pay, what's capped is the standing (ie daily) charge and how much they can charge for each unit of gas or electricity you use ii) It only applies to firm's standard ie default tariffs, the rest aren't capped and they can charge more or less. iii) All firms standard (capped) tariffs price at or very near the Cap max, so its not really a cap.

"In reality the regulator is setting a fixed price and its charged. iv) The wholesale rate used to set the Cap are not the spot rates (ie the rate you can buy energy today) as especially with gas we've no storage.

"The regulator uses long term buy-ahead wholesale rates to set the cap, as its prime focus is energy security. vi) On top of the wholesale rates, it then adds a host of factors on it (network costs, distribution etc), including a set amount of profit, to come up with the cap."