Energy bills will rise by more than £100 for the typical household after Ofgem announced its new price cap.
The price cap is rising by 6.4% – although the exact amount you pay depends on how much gas and electricity you use. The average dual fuel household paying by direct debit will see their annual energy bill increase from £1,738 a year to £1,849 from April 1 – a rise of £111 a year, or £9.25 a month. As a general rule of thumb, for every £100 you spend on gas and electricity, this would increase to £106.40.
It marks the third increase in energy bills in recent months, after the price cap went up by 10% in October, followed by another 1.2% rise in January. The latest price cap rise is also higher than the £85 increase that had previously been expected by industry experts Cornwall Insight – and it comes at a time when other bills are set to go up, including council tax, water and broadband and mobile costs.
Ofgem updates its price cap every three months, so the new rates will remain in place until June 30, when it will then be revised again. The price cap for someone paying by pre-payment meter is rising from £1,690 a year to £1,803, and the yearly charge for someone who pays on receipt of bill is rising from £1,851 to £1,969.
Ofgem blamed the increase on a spike in wholesale prices, along with an increase in policy costs and inflationary pressures. It says prices are 9.4% higher than this time last year, but remain 22% lower than at the height of the energy crisis at the start of 2023.
Jonathan Brearley, CEO of Ofgem, said: “We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households. But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.
“Energy debts that began during the energy crisis have reached record levels and without intervention will continue to grow. This puts families under huge stress and increases costs for all customers. We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward.”
Despite what its name suggests, the Ofgem price cap does not put a limit on how much you can pay for energy – instead, it sets the maximum unit price you can be charged for gas and electricity, as well as the maximum daily standing charge, which is a fixed fee that you pay to be connected to the grid.
This means your bill is still based on the amount of energy you use, and it can be higher or lower than what we’ve mentioned above. These headline price cap figures represent what the average billpayer can expect to pay, based on how much energy Ofgem estimates that the average household uses.
Ofgem says the typical home uses 2,700 kwh of electricity and 11,500 kWh of gas over 12 months. There are other factors to take into account. Unit rate prices vary by region, so your location can also effect your bill, and there are different rates for prepayment customers and those who pay on receipt of bill. Confusingly, the energy price cap figure represents a yearly bill, but it is updated every three months so Ofgem can reflect changing wholesale costs.
The Ofgem price cap covers anyone on a standard variable rate (SVR) tariff – so if you’re not currently fixed into an energy deal. This could be because you didn’t fix into a new deal after your existing tariff expired, or you didn’t fix into an energy deal after moving property.
There are around 22 million people currently covered by the price cap. You can contact your current energy supplier to see what type of tariff you’re on, and to check you’re not being charged above the maximum rates allowed under the price cap.
The average unit rate for gas is rising from 6.34p per kilowatt hour (kWh) to 6.99p per kWh, while the standing charge is going up from 31.65p a day to 32.67p. The average unit rate for electricity is going up from 24.86p per kWh to 27.03p per kWh. The standing charge for electricity is decreasing from 60.97p a day to 53.80p a day.
These are representative of the average direct debit bill across England, Scotland and Wales. There are different unit rates and standing charges for prepayment customers and those who pay on receipt of bills.
Richard Neudegg, director of regulation at Uswitch.com, has urged households to shop around now for a better energy deal. Around 11 million households are currently locked into a fixed energy deal. He said: “If you are still riding the rising rates, now is the time to find a better deal. There are plenty of fixed deals available that are cheaper than today’s rates, let alone the higher April prices. A fixed deal could protect you from further price increases for 12 months or longer.”
Uswitch today flagged Outfox the Market as having the cheapest fix right now, and says this could save the average household around £179 a year compared to the April price cap. Mr Neudegg added: “The larger suppliers are also vying for customers. The cheapest large supplier fixed deal is from British Gas and could save the average household around £172 per year against the April rates.”
The largest cost that makes up the price cap is wholesale energy, which is what energy suppliers pay for gas and electricity. The assessment period for wholesale energy prices for the April 2025 price cap was November 18, 2024, to February 17, 2025. There are other elements that are taken into account as well.
Ofgem looks at the cost of maintaining pipes and wires that carry gas and electricity, network and operating costs, as well as VAT, payment method allowances and profits for the energy supplier. Ofgem will announce its July price cap by May 26, 2025.
Cornwall Insight said the increase in energy bills is down to colder weather and lower levels of gas storage in Europe, resulting in wholesale prices rising sharply. But they predict energy prices could fall to £1,756 from July, due to talks between Russian and US officials aimed at ending the Ukraine war. This is still higher than the current January price cap. It is likely that forecasts will change multiple times before the July cap is set in three months.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “While bills are currently expected to dip slightly in July, we are talking by a few pounds – not the meaningful drop households will be hoping for. Ultimately, if we want to reduce bills substantially and sustainably, we need to reduce our reliance on imported gas, through increasing the number of reliable renewables on the grid.
“However, this is no small ask when we also consider the costs in doing so and also the time associated with market reforms. However, unless we want to remain in the perpetual cycle of volatile markets and increasing bills, this is the only long-term solution.”
At Reach and across our entities we and our partners use information collected through cookies and other identifiers from your device to improve experience on our site, analyse how it is used and to show personalised advertising. You can opt out of the sale or sharing of your data, at any time clicking the “Do Not Sell or Share my Data” button at the bottom of the webpage. Please note that your preferences are browser specific. Use of our website and any of our services represents your acceptance of the use of cookies and consent to the practices described in our Privacy Notice and Cookie Notice.