Martin Lewis warns households of ‘surprise’ rise in energy bills

Martin Lewis, the TV economics guru, has been advising UK consumers battling the cost of living crisis throughout the year and is set to become Christmas budget king.

Sharing proactive and positive financial advice on his ITV program The Martin Lewis Money Show LiveThrough his BBC podcast, website and newsletter and through his regular media interviews, Mr Lewis is a one-man public service dedicated to cutting costs for workers.

No concern is too small to warrant attention, and in a recent post on his popular website, he warned readers of Ofgem’s latest adjustment to its energy price cap coming in January, which means people will see a slight increase in their monthly electricity bills if they don’t pay by direct debit.

The energy regulator will be free to raise the cap again next year, after the government stepped in to freeze average bills at £2,500 in September, reversing Ofgem’s latest figure of £3,549 with its own guarantee.

The next cap review is expected to see an increase to £4,279 for a typical household at a time when many are already struggling.

“The energy price guarantee was supposed to guarantee prices until the end of March (when we know the cost people are paying will increase by 20%),” Lewis wrote.

“So it will come as a surprise to many to see prices change in January.

“For most people the change will be insignificant, but it is disappointing to see more substantial increases, with some on prepaid meters seeing increases of 1%, which includes most of the poorest in society.”

He continued: ‘I have already contacted the Department of Business, Energy and Industrial Strategy to ask if this can be reviewed as it does not seem fair.

“The upside for those who pay on receipt of invoices brings the premium for paying this way to over 10% over direct debit – so while many like the extra check, it’s important to know that with invoices typical January you’ll pay £260 a year for this.

For households using a prepayment meter, the average annual energy bill is expected to rise from January to £2,559 to £2,579, an increase of around 0.8% based on estimated annual usage Typical Ofgem of 2,900 kWh (kilowatt hours) for electricity and 12,000 kWh for gas.

People who pay when they get their bills are looking at a slightly steeper rise of 1.4 per cent to £2,715 from £2,754, according to calculations following the same reasoning.

Grant Shapps, Secretary of State for Business, Energy and Industrial Strategy, responded to Lewis’ concerns by saying, “As you say, it’s marginal for most people. You know we are constantly monitoring government support, but the changes to the bills here relate to how the price cap works to reflect the cost of service, rather than related to the energy price guarantee.

“We recognize that the way the energy price guarantee and the energy price cap interact is not perfect, but it is true that we are moving quickly to support people this winter.

“The energy price guarantee will keep bills at around £2,500 for a typical household this winter and we appreciate you continuing to make that clear.”

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