Martin Lewis discusses the April increase in energy bills
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Martin Lewis appeared, once again, on ITV’s The Martin Lewis Money Show alongside presenter Angellica Bell. Martin, who is the founder of MoneySavingExpert.com, shared another warning with Britons regarding the energy price cap. In tonight’s episode, Martin went “back to basics” on the price cap, explaining the changes Britons could expect to see in the months ahead.
Martin said: “In April, the energy price cap, which the majority of homes are on will rise over 50 percent adding an unaffordable £600 to a typical bill if the Government doesn’t intervene.”
However, he also warned that the energy price cap could rise once again in October by a fighter 20 percent on top of the predicted price cap for April.
He said: “We have to look beyond that into the October period too because we’re looking at next year.
“Now, we don’t know what will happen in October because that’s an assessment of wholesale prices from February onwards.
“But if if they stay where they are right now, we would see another 20 percent rise come October on top of that predicted price cap.”
Martin called the price cap “misnamed” because there’s no maximum amount a consumer can pay for energy.
He said the price cap is not a cap on total costs but more like a cap on the rate a consumer pays for energy.
Martin shared a slide revealing the “rough rates” for energy which do vary slightly by region.
Due to the recent increase in gas prices, 65 percent of homes in England, Scotland and Wales are currently on the price cap.
Martin explained when a consumer is “automatically” moved to the price cap.
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He said: “You’re on it or you’ll automatically be moved to it if you’ve never switched tariff, your cheap fix deal ends – which as there is nowhere to go at the moment that means by April even more people will be on the price cap – or your energy supplier goes bust and you’re automatically moved to a new supplier.
“Now for years I said, ‘don’t be on the price cap, switch, get a much cheaper deal’.
“Everything’s changed. Currently, the price cap forces energy suppliers to sell gas and electricity below its cost price and there are no meaningfully cheaper deals.”
The significant increase in the price cap is being driven by rising wholesale gas prices.
Not only is this having an impact on Britons’ gas prices but electricity bills too as a lot of the UK’s electricity is generated by gas.
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Martin said the price cap looks like it has “dropped recently” but it’s still four times the normal rate.
He described it as a “previously unprecedented, never-thought-of rate”.
The energy bill expert said: “I mean it was up to nine times [higher] but where it is right now it’s come down. It’s still horrific.
“That’s what’s driving all this. Now what we need to look at is the price cap.
“Now for someone with typical use, remember there’s no actual price cap, just to give you a level that would be £1,277 a year.
“What you have to look at though, is where we’re going in April.
“And this is important timing because April’s price cap is dictated by wholesale prices from the end of August to the end of January.
“We’re nearly at the end of that period. So we’ve got a pretty decent idea of where it’s going to go.
“This is the the current prediction it’s going to go up 51 percent.
In fact, the range is 46 percent to 51 percent. That’s a £600-a-year rise with someone on typical bills.”
The Martin Lewis Money Show is available to stream on the ITV Hub.
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