Money Saving Expert Martin Lewis has called the energy cap "irrelevant" as UK households face increased energy bills from April 1 despite the energy cap being lowered. The money guru explained his reasoning on ITV's Good Morning Britain as regulator Ofgem announced today (February 27) that the figure suppliers will be able to charge will drop from £4,279 per year to £3,280, following a recent drop in wholesale energy prices.
Despite the cap's reduction however, households are still expected to see their bills increase by an average of £500. In part, this is due to Government support, the Energy Bills Support Scheme provided over winter months, coming to an end.
The scheme has seen £400 taken off bills in England, Wales and Scotland, while in Northern Ireland the discount is £600 to support people during the cost of living crisis. Speaking on Good Morning Britain, Mr Lewis said: "On 1 April the government, because it sets the energy price guarantee - not the regulator, not firms - is planning to increase from £2,500 a year for someone on typical use by 20%.
"And that's what everyone should think of, you're gonna pay 20% more in England Scotland and Wales, by 20% to £3,000. But because the cap is still higher than the energy price guarantee, the cap is irrelevant."
When will the scheme end?
From April onwards, when the new price cap comes into effect, households will have to pay their full energy bills. The previous scheme saw discounts in England, Wales and Scotland of £66 in October and November applied automatically.
This was raised to £67 from December and continued in January and February. March will see the last of these discounts however.
Is other support available?
An online portal has The Department for Business, Energy and Industrial Strategy been opened to help people who do not have a direct relationship to an electricity supplier - such as people in care homes and park home residents - offering £400 support.
Cost of Living Payments from the Department for Work and Pensions are still available for eligible households. Full details of who is eligible can be found here.
Due to also end in March is the £150 discount on bills has also been available under the Warm Home Discount Scheme for people who receive the guarantee credit element of Pension Credit or who are on a low income.
What Ofgem has said about future energy bills
Ofgem chief executive Jonathan Brearley said: "Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the Energy Price Guarantee. This means that on current policy bills will rise again in April. I know that for many households this news will be deeply concerning.
"However, today’s announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won’t make an immediate difference to consumers, it’s a sign that some of the immense pressure we’ve seen in the energy markets over the last 18 months may be starting to ease.
“If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower.
"However, prices are unlikely to fall back to the level we saw before the energy crisis. Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.
“Where people are struggling, we urge them to contact their supplier to make sure they are getting all the help and support they are entitled to. We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations."
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