Money-saving expert Martin Lewis has revealed to Brits today that energy bills will like increase come the new year.
Appearing on Wednesday's edition of Good Morning Britain, the guest presenter further explained the "complicated" reasons driving the price increases, as well as which regions of the UK will be hit the hardest. While he didn't go into explicit detail for every region, he provided examples in Scotland and England where there could be an increase of around 1.58 per cent.
After doing the maths, Mr Lewis provided details of what led to the changes and compared the prices on the energy price guarantee. His co-presenter, Susanna Reid, was shocked by the numbers he revealed, the Mirror reports.
She began by saying: "For some people you have got some quite disturbing news." Mr Lewis replied: "In January we're going to see a change to the prices people pay for energy under the energy price guarantee.
"These are not substantial changes, the substantial change comes in April when on average, everyone will pay 20 percent more than what they're paying right now for the rates.
"But in January, while if you pay by monthly direct debit on average what you pay won't change, but each region does tweak slightly. So for example in Northern Scotland, in January you will actually see a 0.3 percent drop to direct debit bills, whereas in Southern Scotland, you'll see a 1.3 percent increase to direct debit bills in January.
"The real hit here is for people on prepayment metres and payment in receipt of bills. On average if you are on prepayment metres, you're going to see an increase of just under one percent, so taking a typical bill with someone of typical use, it's a meaningless figure but it gives you the scales we're taking about, from £2,559 a year currently to £2,580 a year.
"If you're paying in receipt of bill, which I know many people have switched to because they don't like direct debits being too high, so they say forget that I'm just gonna pay for what I use.
"You're going to pay a lot more, that's going up in January by 1.58 percent so from the current average of £2,715 a year to £2,758 a year, which means paying in receipt of bill on average for someone with typical use will be £260 a quid a year more. That is what you'll pay for the privilege of having your bills done."
Martin explained which regions would be hit the hardest by the increase. He added: "If I go through the regions, Southern Scotland prepayment metres are going up two percent. And the biggest rise of all is for people in the South of England who pay in receipt of bills, a rise of nearly four percent coming in January. And then in April everyone gets the 20 percent average rise."
Susanna asked how the prices were going up under the cap, to which Martin said: "I need to pre-warn you, this is complicated and I will do my best to explain it."
She replied back: "If it's complicated for you to explain how on Earth are the rest of us supposed to understand it." Martin detailed: "We have the energy price guarantee that has been in place since October, it replaced the price cap.
"What that means, and people will find this staggering, the expensive prices we are paying right now are subsidised by the government. Without that subsidy we would be on the October price cap. So on typical use, the energy price guarantee is £2,500. Without it we'd be paying £3,530 a year.
"In January the price cap rises even more, it goes up to £4,200 a year, but again all that really means is the subsidy for the government is bigger.
"But because the way the subsidy works it is a discount per pence of the unit rate, and because the price cap is recalculated by the regulator each three months and they do slight tweaks by the region, and slight tweaks to the relationship between direct debit, prepayment and payment in receipt of bills, as the price guarantee is just a set discount, what the regulator does on its tweaks has an impact on the actual prices that we pay and it recalibrates the regional prices, it recalibrates the payment in receipt of bills, recalibrates prepayment, so there are winners and there are losers and the losers this time are prepayment metre users, and payment in receipt of bills.
"Now the problem with that for me is if you are on prepayments, not everyone on prepayment has a low income but almost everyone on a low income are on prepayment metres.
"The vast majority of the poorest people in the country are on prepayment metres, so for them in the highest use period of the year to be seeing a rise when we have the energy price guarantee, doesn't seem right."
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