Martin Lewis has shared essential energy need-to-knows ahead of Ofgem confirming the new price cap on Thursday morning. The industry regulator is expected to announce a £450 drop to its energy price cap from July 1 amid warnings that consumers are likely to feel little benefit to their household finances.
Writing in the latest edition of the MoneySavingExpert.com newsletter (MSE.com), Martin said that Cornwall Insight predicts the price cap will “likely drop 35 - 40 per cent, but what we pay will drop an average 15 - 20 per cent”. In monetary-terms, this would be a decrease of £446 on the UK Government’s £2,500 Energy price Guarantee, taking it to £2,054 a year - based on falling wholesale energy prices.
The consumer champion also shared on social media that he will be co-presenting Good Morning Britain on Thursday and will be asking the “questions that matter” to Ofgem bosses during the breakfast show, once the energy price cap has been announced at 7am.
Martin also reminded people that the energy price cap is not the maximum any household will pay on their gas or electricity usage - use more and you’ll pay more, use less and you’ll pay less. He wrote: “Remember though, there's NO TOTAL CAP on what you pay, it's a cap on the underlying rates, so use more, you pay more.”
Below is a brief overview of what the financial guru thinks everyone should know ahead of the change in July, you can read the full details on MSE.COM here.
Martin Lewis new energy price cap need-to-knows
Ofgem recently confirmed to Martin during last Wednesday’s Good Morning Britain that “what we currently pay will come down considerably" - but he wouldn’t commit to the new rate, despite Martin’s powers of persuasion.
Martin also explained how the price cap from July will be under the Energy Price Guarantee, so that’s what households will pay. He said: “In a nutshell, for every £100 you pay on energy now, you'll likely pay £80 - £85 from July.”
He also warned that winter 2023/24 is going to be just as tough as last year. Martin explained: “For most, the drop in the rate paid won't make up for last winter's £66 per month support. Lower users will fare worst, as the £66 was proportionately a bigger reduction on their bills.”
He said that if the predictions are accurate, people will be paying “around double or more what they did before the energy crisis hit in autumn 2021”. Martin also said that further government support for lower to middle income households is “unlikely”, but thinks we are likely to see more fixed-tariff offers start to appear on the market.
A new petition is currently calling on the UK Government to reinstate the £400 Energy Bills Support Scheme, which saw around 26million households benefit from the £66/£67 monthly discounts between October 2022 and March 2023.
Only those in receipt of means-tested benefits, pensioners and those with disabilities are currently set to receive further help with their energy bills, amounting to £900, £300 and £150 respectively.
The founder of MSE.com said high standing charges are likely to remain, which means it will cost every household £300 each year just to have a gas and electricity connection. He also advised those using a non-smart traditional prepayment meter to run their credit down before the price cap changes in July. This will ensure that the money you add is being charged at the (hopefully) lower rate.
The price cap has rocketed from £1,162 a year for a typical household in August 2021 to its current level of £3,280, having briefly reached £4,279, with the pandemic and Russia’s war in Ukraine both pushing up wholesale prices.
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