Martin Lewis has explained why millions of households will be paying more for their energy bills from April, despite the price cap being lowered.
The amount energy suppliers are able to charge households will drop from the current £4,279 per year to £3,280, Ofgem confirmed on Monday (February 27). The regulator said the reduction of almost £1,000 reflects recent falls in wholesale energy prices.
But the Money Saving Expert appeared on Good Morning Britain to explain how energy bills will still be rising. Joining the ITV programme via video, Martin explained: "Since last October, the government has been subsidising energy prices through its Energy Price Guarantee (EPG) scheme.
READ MORE: Ofgem lower energy price cap - but household bills still expected to rise
"If you take the £4,200 [price cap] at the moment, what we're paying is £2,500. The difference is the amount that the government pays to energy companies. The price cap is due to come down to £3,200 but as it is still higher than the EPG, we will still pay the EPG."
He continued: "On the first of April the government, because it sets the energy price guarantee - not the regulators or firms - is planning to increase the price from £2,500 a year for someone on typical use by 20 percent. And that's what everyone should think of, you're going to pay 20 percent more in England, Scotland and Wales. By 20 percent, to £3,000.
"But because the cap is still higher than the EPG, the cap is irrelevant. The prediction is, it's worth noting, from July the price cap will drop from £2,100 - it will now be lower than the EPG so we will pay the lower amount. So the government from July will stop subsidising energy prices and we will pay the lower. "
Martin added that he had written to the Chancellor two weeks ago to urge him to delay the increase, as the hike could have an impact on 'national mental health' and the increase would only be in effect for three months until prices come down again. 18 major charities have backed the call.
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