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Wales Online
Lifestyle
Kathryn Williams

Martin Lewis explains why energy prices have not dropped and why they might not for a long time

Martin Lewis and his money-saving show is back on ITV for the new year and the financial guru has been giving out some post-Christmas tips for those struggling. His primetime show, The Martin Lewis Money Show Live, returned after the festive break with his 'bill-buster' special where he talked about broadband prices going up, prescriptions, and water bills.

But opening the show was talk about energy bills and the rises we have seen over the past year and how it will potentially pan out during 2023. One audience member, Clifford, asked a question many of us would like to know – when will energy prices drop now that the wholesale price of gas, which rose due to various factors including the war in Ukraine, has started to drop?

As expected, Martin had a very thorough answer and a graph – but he didn't have good news as he predicted that next winter energy prices would be higher than they are at the moment, and later on he went to add that the UK Government would not be paying another cost of living payment to all households as is currently happening.

Read more: Martin Lewis urges people to check payslips for tax error that could be worth 1,000s

Martin said the idea that there would be a "great dividend from the way wholesale prices have come down so far" was a "little bit overblown". He went on to explain that wholesale prices are still four times what they were back in late 2021, before the Ukraine conflict, and energy bills are still "two and a half times what they used to be". In late 2021 gas prices per therm (the unit of measurement gas is sold in) was 50p and now it's £2, he said.

The "magic thing" we need to happen, according to the finance whiz, in order for energy bill rises to slow is for the energy price cap to go to a rate that is lower than the energy price guarantee. Martin explained: "We have the energy price cap, which is what the regulators set based on wholesale prices and a little bit of profit for energy firms, and it was going up and up and up. Then, in October, the government said: 'From this point on the state is going to subsidise energy prices.' So we're all pretty annoyed at how much we're paying. Actually a lot of it is now paid by the state – everybody's energy bills, rich or poor, are reduced because of a state subsidy. In October the price cap was due to go up 80%. The actual price we paid went up 27% because we got moved on to the new energy price guarantee, which is the state-subsidised amount, if not would be on the higher amount. And if you look the January figure that came in was even higher. So the subsidy now is even bigger. What we have been told is from April the energy price guarantee is going up 20%. So whatever rate you are paying now will have a fifth on top. And that's what you'll be charged for April and next winter unless the energy price cap goes lower than the energy price guarantee. So that's the magic thing we're looking for."

Martin added that we'd have to see wholesale prices drop even more to reap substantial benefits on household energy bills. You can catch up with Martin's advice and explanations in the full episode of The Martin Lewis Money Show Live on ITVX.

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