Martin Lewis is warning millions of households to brace for a ‘bleak winter’ after new energy price cap predictions indicated a further increase of 51% from October. This means the average, typical user on a standard tariff, will see their bill go up to £2,980 for the next period.
Expert analysts at Cornwall Insight said that as a result of a spike in wholesale gas prices last week, new data show that Ofgem’s next price cap looks set to rise by an extra £1,000 in just 14 weeks’ time. It is currently at £1,971 following the 54% hike on April 1, but is expected to rise to around £2,980.63 for the next period, which runs between October and December. Previous recent estimates put the next price cap at £2,800.
The founder of MoneySavingExpert.com took to social media to share the update, urging his 1.5million Twitter followers to share the news. He said “people need to be aware of the very bleak winter coming” and should “ask the right people questions about how they get through it”.
The consumer champion also announced that he will be updating his guide on energy fixes on Tuesday to help people understand if they should lock in a fixed tariff deal or stick to the price cap.
The financial guru’s current ‘magic number’ for fixing is 35% - but that was based on the October price cap rising to £2,800, not the latest estimations of £2,980.
His rule of thumb for that hike is: “If you're offered a year's fix at no more than 35% above your current price-capped tariff, or 40% more if you very strongly value budgeting certainty, it's worth considering.”
Martin posted on Twitter: “Please do share the tweet below. People need to be aware of the very bleak winter coming. And need to ask the right people questions about how they get through it.
“Oh Sh*t! Just got latest @CornwallInsight price cap predictions. Wholesale prices spiked heavily last week, so they're up a lot
“Today's price cap: At typical use = £1,971/yr
Prediction Oct - Dec: UP 51% (£2,980/yr typical use)
Prediction Jan - Mar: UP 1% (£3,000/yr typical use)”
He added: “PS I will be updating my time to fix analysis on the back of this tomorrow when we've crunched the numbers. I'll tweet the link then.”
No suppliers are currently able to offer new or existing customers a fixed tariff below the price cap.
The energy crisis has reduced the number of suppliers on the market to just over 20, while competition has been destroyed.
For an average household, the price of energy increased from £1,277 to £1,971 on April 1 and had previously been as low as £1,042 in the summer of 2020 – the cheapest since the policy first came into force in 2019.
Cornwall Insight predicts another small rise of 1% in the price cap to £3,003 in January 2023 before dropping down to £2,758 in April and £2,686 in July.
The data suggests high energy prices are going to be around for some time for millions of households across the UK.
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