Martin Lewis has explained why millions of people will see a rise in their energy bills in April, despite Jeremy Hunt's budget announcement. The UK Government has confirmed that its energy price guarantee will stay at £2,500 for an additional three months from April to June.
The price guarantee, which caps the typical household bill at £2,500, was supposed to rise to £3,000 next month but the government had been under increasing pressure to cancel the increase with energy costs still high. It is estimated that Mr Hunt's decision, to be confirmed in his spring budget on Wednesday, March 15, will save the typical household £160.
Energy bills are currently forecast to fall even further in July, with consultancy firm Cornwall Insight currently predicting the price cap - which regulated the maximum a household could pay for their bills until it was replaced by the government's guarantee - will be £2,201 in July- well below the planned £3,000 guarantee from that date.
Read more: Every DWP cost of living payment expected to be paid in March and April
But Money Saving Expert Martin Lewis has explained exactly how your bills will change from April - and millions of people will still be paying more on their gas and electric. In a video posted on his Twitter, Mr Lewis said he had previously written to the chancellor asking him to postpone the April increase, which he said would be "damaging" to energy customers, businesses and the wider economy. He said the price cap - which is set by regulator Ofgem using wholesale energy prices - had kept rising last year, prompting the government to introduce the price guarantee.
"The difference between the energy price guarantee level and the price cap level is paid for by the state," he said, adding that a typical bill this winter would have been over £4,000 under the price cap, rather than £2,500 under the government's price guarantee.
Mr Lewis said current predictions showed that the price cap in July is estimated to drop to just over £2,000 - below the energy price guarantee, which will rise to £3,000 in July. "We will pay the lower of the two, which means the energy price guarantee, which lasts until next April 2024, is no longer relevant from July."
Mr Lewis said bills in April would remain "mostly flat" due to the government's decision but that customers would lose the government's £400 discount off bills, which runs out at the end of March having given households money off their bill since October. "So in practice you will pay more, just not as much more as you were paying. And especially for those with lower usage where that £66 was a disproportionate boost. Because if you're a lower user it had a bigger effect. This is going to feel a big loss when it comes to April."
He said energy prices were predicted to fall by around 19% in July, though he conceded there was some "crystal ball gazing" meaning this was not definite and could change depending on wholesale rates. He said prices were set to remain "mostly flat" for the rest of the year but that when it came to 2024, it was "too difficult" to predict.
"I need to be honest, if there were big changes, a change to the situation between Ukraine and Russia, that could have massive moves on what's going on with those wholesale rates and other worldwide macroeconomic and political factors could change what happens to those rates."
Mr Lewis said he and his team had been trying to work out what the new standing charges would be, which he said the UK government had confirmed were "in the right ball park." They are as follows:
Electricity (direct debit):
From 46.4p to 53p a day / unit rate falling from 34.04p to around 33.2p
Gas (direct debit):
From 28.5p to 29.1p a day / unit rate from 10.33p to 10.3p
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