If you’ve been keeping an eye on your energy bills, you’ll know that the Energy Price Cap has been something of a safety net since it was introduced in January 2019. It’s helped prevent millions of households from being charged excessively for their gas and electricity. However, from 1st April 2025, the cap is set to rise by 6%, which means higher costs for many UK homes.
So, what exactly does this change mean for you? Let’s take a detailed look at what’s behind the increase, how it might affect your bills, and what you can do to keep your energy costs under control.
What’s the Energy Price Cap, Anyway?
Brought in by Ofgem, the UK’s energy regulator, the Energy Price Cap was introduced to stop suppliers from charging extortionate rates for gas and electricity—particularly for people on standard or default tariffs (which most households are on by default once their fixed-rate deals end).
Before the cap, customers on these variable tariffs were often hit with inflated prices, especially when wholesale energy costs surged. The cap ensures suppliers can’t charge more than a set limit per kilowatt hour (kWh) of gas and electricity. It also controls the daily standing charge—the fee you pay just for being connected to the grid, regardless of how much energy you use.
The cap is largely based on wholesale energy prices—the rates suppliers pay for the gas and electricity they provide to customers. When wholesale prices go up, the cap tends to increase, and when they fall, the cap should theoretically reduce. However, the market has remained volatile in recent years, keeping prices stubbornly high.
It’s important to note that the cap only applies to standard and default tariffs. If you’re on a fixed-rate plan, you won’t be directly affected by the cap itself. However, if you renew your deal once it expires, you could still face higher prices due to ongoing market trends.
Why Are Energy Prices Still Rising?
Although energy prices have dropped from their record highs, they’re still significantly higher than pre-2021 levels. Several factors are keeping costs elevated
1. Global Supply and Demand:
Following the COVID-19 pandemic, energy demand surged as businesses and industries reopened. This sudden increase led to supply shortages, driving wholesale prices higher. While supply has stabilised somewhat, demand remains strong, keeping costs elevated.
2. Geopolitical Tensions:
The ongoing Russia-Ukraine conflict has had a major impact on global gas supplies. Many European nations reduced or completely cut off their Russian gas imports, which created further shortages and drove prices up. Even though the UK isn’t as reliant on Russian gas as some European countries, the reduced supply has still contributed to higher wholesale costs.
3. Production Costs:
The cost of producing energy, particularly from natural gas, has also risen. This increase in production expenses is passed on to consumers through higher retail prices.
4. Green Energy Transition:
As the UK continues its shift towards renewable energy, the costs of building infrastructure for solar, wind, and other sustainable sources are being factored into energy pricing. This transition, while necessary for long-term sustainability, is contributing to short-term price increases.
Even though wholesale prices have come down from their peak, they remain much higher than before the crisis. As a result, households are still paying nearly double what they were before the energy market turmoil.
What’s Changing on 1st April 2025?
From 1st April 2025, the Energy Price Cap will increase by 6%, raising the average annual bill for a typical household paying by Direct Debit to £1,849. This increase is largely due to rising wholesale energy prices, driven by the global supply and demand issues mentioned earlier.
If you’re on a standard variable tariff (also known as a default tariff), here’s what you’ll be paying for your energy from 1st April to 30th June 2025:
Electricity Rates
- Unit rate: 27.03p per kilowatt hour (kWh)
- Standing charge: 53.80p per day
Gas Rates
- Unit rate: 6.99p per kilowatt hour (kWh)
- Standing charge: 32.67p per day
These figures reflect the average rates across England, Scotland, and Wales, including VAT.
How Will This Affect Your Energy Bills?
If you’re on a standard or default tariff, your energy bills will increase slightly, but the exact impact will depend on how much energy you use.
For example:
If your household uses more energy than the national average, your annual bill will be higher than £1,849.
Conversely, if you use less energy, your bill will be lower than the average estimate.
It’s also worth remembering that the Energy Price Cap doesn’t limit your total bill, it only caps the unit rates and standing charges. So, the more gas and electricity you use, the more you’ll pay.
How to Manage Rising Energy Costs
Even though the Price Cap is going up, there are still ways to keep your bills under control. Here are some practical steps you can take:
- Consider a Fixed-Rate Tariff: If you’re on a standard variable tariff, it might be worth exploring fixed-rate deals. While fixed plans don’t guarantee lower prices, they do offer more stability by shielding you from sudden price spikes.
- Reduce Your Energy Usage: Making small changes to your energy habits can help you save. Turning off unused lights, using energy-efficient appliances, and lowering your heating by a degree or two can add up to noticeable savings over time.
- Shop Around for Better Rates: Even with the cap in place, it’s still worth comparing suppliers. Some energy companies offer slightly lower rates or extra benefits, so it’s worth checking if you could switch to a better deal.
- Look Out for Government Support: Keep an eye on any government schemes or grants designed to help with energy costs. Many households are eligible for financial support, including discounts and rebates, which could help offset the rising costs.
Wrapping It Up
The Energy Price Cap increase coming on 1st April 2025 is another reminder that energy prices remain high, despite falling from their crisis peak. The 6% rise will push bills higher for most households, but there are still ways to manage your energy costs.
By being proactive, whether that’s switching to a fixed-rate deal, cutting back on usage, or seeking government support you can take steps to keep your energy bills in check. Staying informed and making smarter energy choices will help you navigate the rising costs and avoid any unwelcome surprises on your bills.
Another huge legislation change that falls in line with the rise of energy costs, is the simpler recycling campaign aimed at reducing overall waste and reducing overall emissions.
