Martin Lewis explains major energy bill changes that could see costs rocket
MARTIN Lewis has warned that millions of households will see their bills rise next April.
The founder of MoneySavingExpert.com said that the average household will see their bills rise by 73% next April.
Speaking on ITV’s Good Morning Britain, Martin Lewis said: “We’re currently under the Energy Price Guarantee, which is effectively a cap on energy costs that was due to last for two years but it will now last for six months.”
“We assume in April, that we’ll go back to the old energy price cap methodology set by Ofgem and based on wholesale prices.”
And Martin said that if this change happens, the average household energy bill could rise by over 70% in the spring.
Recent predictions by experts at Cornwall Insight suggest that bills will rise from £2,500 to £4,350 a year from April 2023.
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But other forecasts suggest that the average bill could surpass £5,000 a year next spring.
Consultancy firm Auxilione forecasts that average bills could hit £5,078 and RBC Capital Markets predicts £4,684 a year.
Martin Lewis explained how the average energy bill has changed over the last year.
He said: “About a year and a half ago, if you were on a cheap fix you were paying £800 a year and if you were on a variable rate you were paying £1,100.
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“Until October that had gone up to £1,971 on the cap, it’s now up to £2,500 and from April 2023 we’re talking £4,350 a year.”
But the energy bills were due to rise beyond £2,500 this October before Liz Truss announced the Energy Price Guarantee.
This temporarily replaced the existing price cap, which was set to hit £3,549 in October.
Under the Energy Price Guarantee, a typical family was meant to pay no more than £2,500 a year for their energy bills for the next two years.
And the two-year price freeze on bills would have saved households £1,000 a year.
However, the cap is just on what firms can charge customers. Your bill could be higher, based on your own personal energy usage.
But now that Jeremy Hunt has confirmed that the Energy Price Guarantee will end in April – energy prices are predicted to rise considerably next year.
Martin Lewis said that energy prices would stay at £4,350 for three months from next April but then “drop by about 15% to £3,700 where it’ll probably stay at that rate for the rest of next year.”
The government is yet to confirm whether the Ofgem set energy price cap will return from April 2023.
We’ve just listed the eight energy grants and freebies customers can claim to help bring down their bills this winter.
Jeremy Hunt’s mini-Budget u-turns have also been listed in full.