Martin Lewis said the latest estimate of how much energy bills could rise this year left him 'feeling sick'. The money saving expert warned UK households that the energy price cap is now predicted to rise by around £450 more than previously expected.
Mr Lewis told his followers on Twitter that the cap is now expected to go up by 64 per cent in October, which could see Brits spending £3,244 a year on their bills. It comes after Ofgem predicted in May that the October cap would rise to around £2,800.
The latest estimates come from Cornwall Insight, one of the country’s premier energy consultancies, and are based on what an average household spends on gas and electricity in a year. Cornwall also predicted that the price cap could go up by another £360 more than previously thought in January.
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If the predictions are right, bills could rise by a staggering £1,393 - from £1,971 currently to £3,364 - by the start of 2023.
Responding to the latest estimates, Mr Lewis told his followers: "I feel sick writing this! I've just got the latest price cap predictions from Cornwall Insight. A huge spike in the key year-ahead wholesale price means October cap prediction UP 64% (so £3,244/yr on typical bills). January cap prediction UP 4% (so £3,363/yr)."
He described the figures as "horrendous", adding that "we're now near the end of the assessment period that sets Oct's cap, so this is the right ballpark".
Mr Lewis said the government would need to do more to help people with rising bills, explaining that former chancellor Rishi Sunak based the financial support package announced in May on the previous Ofgem prediction. He said: "The Oct prediction is now £450/yr HIGHER than Ofgem mooted in May & that was what Sunak based the £400-£1,200/yr help on. More will be needed!"
Mr Sunak's £15 billion package to help with the rising cost of living promised a £400 energy grant for every household in the country and up to £1,200 for the most vulnerable households.
Energy prices on wholesale markets have been soaring over the past year. In April energy bills rose 54% for the average household to £1,971 for those on default tariffs paying by direct debit. Previously, the price had been as low as £1,042 in the summer of 2020 – the cheapest since the policy first came into force in 2019.
Ofgem bases the price cap on how much it would cost a typical energy supplier to provide energy for an average home. A raft of factors are considered including wholesale gas and electricity costs for suppliers and the network costs they have to pay.
Commenting on the latest predictions, Dr Craig Lowrey, from Cornwall Insight, said: “There is always some hope that the market will stabilise and retreat in time for the setting of the January cap. However, with the announcement of the October cap only a month away, the high wholesale prices are already being ‘baked in’ to the figure, with little hope of relief from the predicted high energy bills.”
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