The Government may be planning on scrapping the £500 hike in the average energy bill next month amid pressure from fuel poverty campaigners.
Some energy suppliers are said to be preparing April bills with the expectation that the Energy Price Guarantee (EPG) will be retained at or very near the current £2,500 level, according to money saving expert Martin Lewis. The Government has previously said all help for bills is under review, although Chancellor Jeremy Hunt has so far declined to extend the support, with the figure currently due to rise to £3,000 on April 1. However experts are suggesting it is increasingly likely he will change course, probably at the Budget on March 15.
Energy Secretary Grant Shapps previously said he is "very sympathetic" to suggestions that the planned £500 rise in bills should be stopped, although a Treasury source declined to comment, according to the BBC.
Read more: Energy bills to DWP Universal Credit - everything we know will rise in April
The £500 hike for the average family comes on top of the end of the £400 Energy Bills Support Scheme (EBSS), which paid most families £66 or £67 a month from October to March. This month's payment is the last one, which will also push bills up.
Speaking on BBC Radio 4's Today programme this morning, Martin Lewis said there there was a strong chance prices would not rise in April, after the deadline for energy firms to tell the pre-payment meter providers what the new April rates would be passed with some firms keeping it at the current rates.
He said that he had heard that there was going to be an attempt to keep the rate at £2,500, adding: "We're not at the smoking gun stage that this is definitely happening but I would say that we're at an 85% likelihood that the price won't be going up."
The news came after more than 110 organisations joined Mr Lewis to call on Jeremy Hunt to scrap the plans to increase the EPG to £3,000. Mr Lewis set out the campaign call in a letter to the Chancellor, saying: "While the EPG isn't perfect, as it's not targeted, it is the method the Government currently uses to support people. Postponing the increase is a practical and fair decision, with household energy bills already double what they were the prior winter. Crucially, the damage to people's pockets and mental health of another round of energy price rise letters is disproportionate."
The letter goes on to say that without intervention, charity National Energy Action predicts that the number of fuel poor households will rise from 6.7 million to 8.4 million from April – nearly double the 4.5 million households in this position in October 2021. The letter has been supported by major national charities such as Action for Children, Shelter and The Samaritans, as well as local groups such as North East Child Poverty Commission and Citizens Advice Newcastle.
There has been a drop in wholesale gas and electricity prices in recent weeks which has raised hopes that the worst of the energy crisis could be easing, with economics research institute The Institute for Fiscal Studies (IFS) forecasting that the Treasury could afford to keep support at current levels until the summer as cost of the scheme had decreased.
Without the Government's energy price guarantee to limit prices, a typical household gas and electricity bill would have hit £4,279 a year from January under the energy price cap which is set by Ofgem, the industry regulator.
Mr Lewis said: "At the moment, the price cap, the Ofgem one, is higher than the price guarantee. So we pay the price guarantee. All the predictions are, from July onwards, the price cap will be lower than the Government's price guarantee. So we will pay the price gap, there won't be any more subsidy.
"So in practical terms, the current prediction is: in April, it'll either go up 20%, or not go up. If it hasn't gone up, then we'd still expect to see a drop of 10% to 12% from current prices from July onwards, because wholesale rates has gone down.
"There's a big time lag before we feel the benefit of wholesale rates going down because of the way the price cap system works, which is why my letter was about postponing it till July. Because after that point, frankly the energy price guarantee is unlikely to have any impact on us anyway. It no longer exists in reality, even though it's in the background until next April."
Gemma Hatvani, founder of Energy Support and Advice UK Facebook page set up to help people who have issues with their energy suppliers, says her site has been 'overwhelmed' with requests for crisis payments in the wake of ever-increasing bills throughout the winter.
Ms Hatvani, who started the group after she was made redundant from energy suppler EON in 2020, says members desperate for help to keep their homes warm has increased by 800%, and she and her team of 18 advisors are struggling to cope with thousands of emails every day from people unable to pay their energy bills.
"Energy Support and Advice UK is predicting a perfect storm on April 1 for domestic energy customers," she said. "We hope the Government will reconsider their planned action in the Budget statement. However, in the meantime, it’s incredibly important energy customers continue to carefully budget and control their energy usage accordingly. We are continuing to deliver high quality education and current advice to our community of over 120k households and collaborate with many industry experts including ivie, one of the leaders in energy saving technology to bring the best education for our members to help them reduce their energy usage and costs both now and in the future."
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