Energy bills: Martin Lewis explains post-budget changes to gas and electricity prices

The chancellor has confirmed the energy price guarantee will be extended for another three months to help struggling households.

Martin Lewis from Money Saving Expert speaking to an audience of Londoners about the challenges they are facing as a result of the rising cost of living, hosted by London Mayor, Sadiq Khan at City Hall in London. Picture date: Thursday February 2, 2023. (Photo by Stefan Rousseau/PA Images via Getty Images)
Martin Lewis has explained what the energy price guarantee extension could mean for energy bills. (Getty)

The chancellor has confirmed the energy price guarantee (EPG) will be extended for another three months to help struggling households.

In his budget speech, Jeremy Hunt said the EPG, which limits a typical household energy bill to £2,500, will remain at its current level from April to June.

It had been due to increase to £3,000 on 1 April to reduce the burden on state finances. The extension will, according to Hunt, save the average family a further £160.

For those still unsure what impact the EPG has, consumer champion Martin Lewis has outlined what it is likely to mean for gas and electricity bills.

He said his predictions for new unit rates and standing charges were not official, but when he showed some estimated numbers to energy secretary Grant Shapps recently, he confirmed they were in the "right ballpark".

Lewis said of electricity direct debit bills: “We know the standing charge will rise again, from 46.4p to 53p a day, you will pay more a day.

“But because that is rising, the unit rate you pay for electricity will be falling. So that will drop from 34.04p to around 33.2p.

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For gas bills, he said: “The standing charge is rising again, not by as much, from 28.5p a day to 29.1p a day, which means we'll see a very slight decrease in the unit rate from 10.33p to around 10.3p.

"For most people, it's roughly the same, there is a slight increase for lower users because the standing charge has gone up and a slight decrease for high users because the unit rate has gone down."

Lewis also warned consumers that they should budget for the fact that the £400 winter payment, which everyone received to subsidise their bills, is due to end in April.

Chancellor of the Exchequer Jeremy Hunt leaves 11 Downing Street, London, with his ministerial box before delivering his Budget at the Houses of Parliament. Picture date: Wednesday March 15, 2023. See PA story POLITICS Budget. Photo credit should read: Stefan Rousseau/PA Wire (Photo by Stefan Rousseau/PA Images via Getty Images)
Chancellor Jeremy Hunt leaves 11 Downing Street before delivering his budget. (Getty)

Citizens Advice chief executive Dame Clare Moriarty explained: “The withdrawal of the Energy Bill Support Scheme will still mean the average monthly bill rises by £67 from April.

“With millions already unable to afford their bills and energy prices set to remain high in the years ahead, the government must now look at long-term solutions to this problem."

The EPG: Why did Hunt extend his mind?

The government had come under increasing pressure in recent weeks to cancel the rise to the EPG.

As wholesale energy prices have dropped, it has become increasingly affordable for the government to continue protecting customers with the same deal they are on now.

Energy prices are now 50% lower than forecast in October and are projected to continue dropping.

Without the government’s help, the average household would have been paying an annualised bill of almost £4,300 between January and April. But the support reduced that to £2,500.

This means that the government has been paying around £1,800 towards each household’s energy bills.

From April, without support, the bill would have reached around £3,300 for the average household, according to the latest Ofgem price cap announcement.

From July, lower wholesale gas prices are expected to feed through further to customers, with Cornwall Insight data predicting the Ofgem price cap will reach just over £2,000 a year for a typical household.