Rising energy bills could force some households to make the difficult choice between eating or heating their homes, Martin Lewis has warned.
The Money Saving Expert founder is urging the government to intervene now to avoid a crisis in the energy market after saying home owners can expect to take a “seismic” hit to their bills this year.
How much could bills go up?
The government’s energy price cap is due to be revised in February, with the increase to be added to customer’s bills from April.
Bills are expected to rise from £1,277 per year under the current price cap to £1,865 annually when the next revision is announced, according to energy sector specialist Cornwall Insights. This is a rise of 46%.
The company also predicts that prices could spike to £2,240 per year at the following quarterly revaluation in August 2022 without a significant drop in energy prices globally.
Mr Lewis said: “This year is going to be a very tough year for many people. The energy price crisis needs substantial intervention from the government.
“We are going to see a minimum 50% increase in energy prices in the system and that is unsustainable for many.
“We need to look at what we can do now and how we can protect those people who will need to choose between heating and eating.
“There are already some who are having to make that choice.
“We need to look at the whole structure of the energy market. The government didn’t intervene early enough so we’re all paying for the market collapses we’re seeing.”
What needs to be done?
Last year saw several energy firms go bust, prompting Ofgem to announce changes to how much firms, and eventually customers, can be forced to pay to fund rivals’ collapses.
The change came after other energy firms picked up the tab for collapses of others, while the government took over the running of Bulb after it failed last November.
However, industry experts have said more still needs to be done to avoid future companies from going bust, while stricter rules need to be put in place over who can run suppliers.
Mr Lewis said there needs to be greater protection for the most vulnerable who may not be able to shop around for the best deals, or may be stuck on more expensive pre-payment options.
He added: “What’s coming in April is a seismic hit for fuel bills which is going to be astronomical.
“The government has been meeting the energy industry but they’ve not been meeting the consumer groups.
“Certainly, I’ve not heard of any taking place. They have to sort this now because if we leave this before it’s too late it will be a disaster.”
A government spokesperson said: “Protecting consumers is our top priority which is why our Energy Price Cap will remain in place.
“We are also supporting vulnerable and low-income households further through initiatives such as the £500 million Household Support Fund, Warm Home Discount, Winter Fuel Payments and Cold Weather Payments. Domestic fuels such as gas and electricity are also already subject to the reduced rate of 5% of VAT.”