Martin Lewis has reacted to today’s announcement that the energy price cap will rise by 6.4% with a £106 warning to UK gas and electric customers.
The Money Saving Expert explained on his Money Show, how the latest increase in the maximum amount energy suppliers can charge consumers on default tariffs for each unit of energy will affect them.
He said: “In simple terms, every £100 you pay now, will cost £106.40 from April.
“Remember, it is not a cap on what you pay, if you use more, you’ll pay more.”
The energy price cap was introduced in 2019 and places an upper limit on what energy providers can charge for each unit of energy used.
The cap is reviewed quarterly by the energy regulator, Ofgem and today’s increase, which will take effect from April 1, is the third consecutive rise.
The regulator blamed the ongoing war in Ukraine for disrupting energy availability and pipelines as it confirmed the cap on gas and electricity charges would rise by £111.
The Government said: “In practice, this rise will mean an increase of around £9 per month for a typical household over the next 3 months.”
The rise means that on average, a typical household will pay £1,849 for their energy over the course of a year.
The 6.4% rise will mean that households are paying around £600 more for gas and electric than they were three years ago prior to Russia’s invasion of Ukraine.
The Government website added that energy prices are rising because “international gas prices have risen, bringing British energy bills up with them.”
It continued: “That’s because the price we pay for energy in the UK is set by gas prices on the global market, over which we have no control.
“As a result of recent events that have affected the market, which the whole of Europe is dealing with, wholesale gas prices covered by the period of this price cap are around 15% higher than they were in the period covered under the previous price cap. This is comparable to the rise in prices across Europe.”
Ofgem CEO Jonathan Brearley believes that a potential peace in Ukraine could potentially lower the amount households are paying for energy.
He said: “Without a doubt, Ukraine was a massive strategic factor that drove up our prices so I would be really hopeful that prices would come down again if we got peace in Ukraine, if gas trading starts to normalise.
“But critically, if nothing else happens in the world that would drive those prices up.”
