The cost of living has remained on everyone’s minds into the new year. Most specifically, the high price of gas and electric bills.
While the wholesale price of gas spiked in the summer of 2022, this has reportedly come back down. However, UK consumers are yet to see this drop in the actual price of their bills - but why?
MoneySavingExpert Martin Lewis has discussed the reason why bills are remaining consistently high, as well as the fact that they are once again set to rise in April. The topic came up while he was hosting the popular ITV show The Martin Lewis Money Show.
But what did he say - and what are his bets tips for keeping your bills as low as possible? Here’s everything you need to know.
What did Martin Lewis say about the wholesale price of gas?
The discussion on the wholesale price of gas began after a question from an audience member. The audience member asked the money expert: “With the wholesale price of gas apparently falling, why hasn’t the consumer price of gas gone down, or our electricity, which is in part, generated from gas?”
Knowing that the matter would have been on the minds of many, Martin did his best in breaking down the situation in simple terms. He said: “In the old days, it was 50p per therm, then in October 2021 it started to rise, and then we had the terrible conflict in Ukraine.”
Martin explained that the wholesale price then spiked at £2 per therm. He told the concerned audience members that the consumer price compared to the wholesale price works on a time-lag, with the saving noticable in later bills.
He said: “Now it’s important to understand that the January price cap - there’s a time lag - it was set based on wholesale prices from February 2022 until November 2022. The next price cap after that, which starts in April, is based on wholesale prices from November 2022 to February 2023.
Martin added that the price of wholesale price should stay low if Europe’s stocks of gas remain high. However, he gave a stark warning that the energy price cap will still rise in April, meaning that bills are still scheduled to increase throughout 2023, saying: “On the current prediction, what’s going to happen to your prices in April, it’s going to go up 20%, and then if we’re lucky, from July, it’s going to drop a bit, but on current predictions it’ll still be more than now.
“It’s not what you wanted to hear, at least you know that you’re going to need to prepare. The likelihood right now is next winter, you’re probably paying more than this winter.”