The government has been urged to take action to tackle soaring energy prices to avoid people being forced to “choose between heating and eating”.
Money Saving Expert founder Martin Lewis has warned households that they could take a “seismic” hit to their energy bills as he urged ministers to intervene now to avoid a crisis in the market.
He said 2022 is going to be “a very tough year for many people” and “substantial intervention” is needed by the government.
“We are going to see a minimum 50% increase in energy prices in the system and that is unsustainable for many,” he told PA news agency.
Energy price cap review
His warning comes as the government prepares to revise its energy price cap in February, which would see the increase applied to customers’ bills from April.
Energy bills could rise by 46% following the review from an average of £1,277 a year under the current price cap to £1,865 a year, according to energy sector specialist, Cornwall Insights.
The firm also estimates that it would spike to £2,240 a year at the following quarterly revision in August if energy prices do not significantly fall globally.
“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,” Mr Lewis said.
“There are already some who are having to make that choice.”
He added that greater protection is needed for the most vulnerable, who may not be able to shop around for the best deals, or are stuck on expensive pre-payment options.
“What’s coming in April is a seismic hit for fuel bills which is going to be astronomical,” he said.
“They (the government) have to sort this now because if we leave this before it’s too late it will be a disaster.”
The collapse of energy companies in 2021
In 2021, several firms went bust forcing customers at other energy companies to pick up the tab for the collapses, while the government took over the running of Bulb after it failed in November.
“The government didn’t intervene early enough so we’re all paying for the market collapses we’re seeing,” Mr Lewis added.
Ofgem has since announced changes to how much other energy firms, and eventually customers, can be forced to pay to fund rivals’ collapses.
What does the government say?
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.”