MARTIN Lewis has warned households they face rising energy costs next year after a government u-turn.
The founder of MoneySavingExpert.com said the average household bill could rise by 73% from April when a bill freeze ends.
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It comes after the government said the Energy Price Guarantee will now only freeze the average energy bill at £2,500 for six months instead of two years.
Speaking on ITV’s Good Morning Britain, Martin Lewis said the earlier than expected end to the Energy Price Guarantee will leave many facing higher costs.
Martin said that he “assumes in April, that we’ll go back to the old energy price cap methodology set by Ofgem and based on wholesale prices.”
The government has said the blanket bill freeze will instead be replaced by more targeted support to help the most hard-up households.
The exact help has not yet been decided and new Chancellor Jeremy Hunt has said a review by the Treasury will be launched.
This could mean that households on the lowest incomes may be better protected from a bill shock next April.
Martin said that if the original price cap returns, the average household energy bill could rise by over 70% in the spring.
New predictions by experts at Cornwall Insight suggest that bills will rise from £2,500 to £4,350 a year from April 2023 without the freeze in place.
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But other forecasts suggest that the average bill could be even higher from next spring.
Consultancy firm Auxilione forecasts that average bills could hit £5,078 and RBC Capital Markets predicts £4,684 a year.
It’s important to remember that these are forecasts and that a change to wholesale prices in the coming months could mean the price cap is higher or lower.
Plus any cap is just on what firms can charge customers for each unit of gas and electricity.
This means that your bill could be higher depending on how much energy you use – so if you use more, expect to pay more.
Martin said that if the price cap returns, energy prices would stay at £4,350 for three months from next April under current predictions – 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 energy price cap set by Ofgem will return from April 2023.
Martin Lewis explained how the average energy bill has changed.
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.
“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.”
With out the current price guarantee bills had been due to rise beyond £2,500 this October.
Liz Truss brought in the Energy Price Guarantee from October to temporarily replace the price cap, which was set to hit £3,549 in October without action.
Under the Energy Price Guarantee, a typical family pays no more than £2,500 a year for their energy bill.
It was meant to be in place for two years, but will now end in April 2023 after the government’s change
The two-year price freeze on bills would have saved households £1,000 a year.
Announcing the change to bills Mr Hunt said it “would not be responsible” to carry on the cap after considering the “volatility” of the energy market.
He said after April help would be targeted to those most affected by big price rises, and will incentivise energy efficiency.
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.
