Martin Lewis gives stark warning over energy price cap hike as households face higher bills

He calculated that each household will typically be paying an extra £45 per month if factoring in higher winter usage

Athena Stavrou
Thursday 23 November 2023 13:48 GMT
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Martin Lewis explains what energy price cap rise means for household bills

Money saving expert Martin Lewis has warned Britons that they will pay “more than any winter before” on their energy bills.

Millions of householders are set to pay 5 per cent more for their gas and electricity bills after the energy watchdog Ofgem announced its latest price cap.

The new rates – which come into effect from 1 January – will cause dismay among the millions of people across the UK struggling with the cost of living crisis.

TV presenter Martin Lewis gave his verdict on the announcement, saying people will pay more this January that “any winter before”.

The money guru took to X, formerly known as Twitter, to explain that the reason people will pay more is due to the absence of government help that was given last year.

Last winter, every home got a £66 per month reduction in their bills, but this measure was not put in place again this year.

Mr Lewis explained that while October inflation dropped due to cheaper energy bills, the claim ignores the missing government support.

He calculated that each household is on average worse off by £28 per month this winter. However, this could rise to an extra £45 per month, if factoring in higher winter usage.

Citizens Advice warned it was already helping record numbers with energy debt and was seeing more people than ever who can’t afford to top up their prepayment meter.

“Prices going up during the coldest part of the year will make life harder for millions of people already struggling to pay their bills,” said Gillian Cooper, director of energy at Citizens Advice.

Ofgem said the increase was driven almost entirely by rising costs in the international wholesale energy market due to market instability and global events

Regulator Ofgem resets the cap every three months – in January, April, July and October – as the amount paid by a typical household. The latest announcement involves maximum charges for 1 January 1 to 31 March 31 next year.

Ofgem said the increase – of around £7.83 a month – was driven almost entirely by rising costs in the international wholesale energy market due to market instability and global events, particularly the war in Ukraine and including the conflict in the Middle East.

Bills for a typical energy user paying by direct debit will rise from £1,834 a year to £1,928, an increase of £94, the regulator said.

The idea of the price cap is to ensure that prices for customers on default energy tariffs are a fair reflection of the cost paid by suppliers for wholesale energy, and that the profit firms make is capped.

For an average household paying by direct debit, the unit rate will rise from 27p to 29p/kWh for electricity and stay at 7p/kWh for gas. The average daily standing charge will remain at 53 p/day for electricity and 30 p/day for gas.

The cap does not set a maximum amount for individual bills received – households that use more than the average amount will pay more, and those that use less will pay less.

Ogfem chief executive Jonathan Brearley said: “This is a difficult time for many people and any increase in bills will be worrying. But this rise – around the levels we saw in August – is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price that we all pay.”

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