Martin Lewis warns households of new year energy bills hike

Martin Lewis, the TV money-saving guru, has issued advice to British consumers struggling with the cost of living crisis throughout the year and is fast becoming king of the budget Christmas.

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

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

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

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

“The energy price guarantee was meant to guarantee prices until the end of March (when we know the cost people pay will increase by 20 per cent),” Lewis wrote.

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

“For most people, the change will be trivial, but it is disappointing to see more substantial increases, with some on prepay meters seeing rises of 1 per cent, which include most of the poorest in society.”

He continued: “I have already been in touch with the Department for Business, Energy and Industrial Strategy to ask if this can be looked at, as it does not seem fair.

“The bump up for those who pay in receipt of bills takes the premium for paying that way to more than 10 per cent over direct debit – so while many like the extra control, it’s important to be aware that, with typical bills from January, you’ll pay £260 a year for it.”

For households using a prepayment meter, the average yearly energy bill looks set to rise from January to £2,559 to £2,579, an increase of around 0.8 per cent based on Ofgem’s typical annual use estimate of 2,900kWh (kilowatt hours) for electricity and 12,000 kWh for gas.

People who pay when they receive their bills are looking at a slightly steeper hike of 1.4 per cent, up from £2,715 rather than £2,754, according to calculations following the same rationale.

Grant Shapps, secretary of state for business, energy and industrial strategy, responded to Lewis’s concerns by saying: “As you say this is marginal for most people. You know we keep government support under review at all times, but changes to bills here are about the way the price cap operates to reflect cost to serve, rather than related to the energy price guarantee.

“We acknowledge the way the energy price guarantee and the energy price cap interact is not perfect, but it’s right. We move 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’re grateful to you for continuing to make that clear.”

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