Martin Lewis has explained the impact a recent fall in gas prices is likely to have on household energy bills. The Money Saving Expert gave his verdict on how the recent dip in gas prices on the market could affect customers during an appearance on Good Morning Britain on Wednesday.
Asked whether the recent drop would mean households would see a decrease in their monthly energy bills, Mr Lewis explained that the answer was less straightforward. The UK government is announcing a package to cap energy bills for struggling businesses this winter on Wednesday in the latest bid to help those hardest hit by the cost of living crisis.
Mr Lewis said that the new price guarantee introduced by prime minister Liz Truss which will see the typical household energy bill capped at £2,500 per year for two years from October 1 made gas price increases less relevant.
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"People keep sending me a graph saying 'look, energy prices are going down' - yes, but the first thing to understand [is that] the gas price that counts is the year ahead wholesale rates - the day ahead is irrelevant. It's the year ahead wholesale rates, because the regulator wants firms to buy a year ahead so we have energy security in the UK, and it's why it's pushed for that. That's one of the reasons prices are high, for that energy security issue."
Mr Lewis said gas prices were "still incredibly high" and that if the new energy price guarantee was not being introduced the January 2023 price cap would not have risen as high as predicted. But he said this was no longer relevant for those wondering about their bills as the price cap has now been overrode by the price guarantee.
"The January still price cap was still being assessed, so had we still been on that it probably now wouldn't have risen as much as we expected due to this slight lowering in gas prices. But that's all gone. We're on a price guarantee rate which locks in prices for two years from October 1. That is cheaper than the old [October] price cap would have been anyway. Looking at the wholesale gas rates isn't going to give you anything now, the rate we have is locked in pretty much for the next two years."
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