Energy bills will rise by an average of £111 per household a year, after the regulator announced its quarterly price cap will rise by 6.4 per cent across England, Wales and Scotland.
Ofgem’s new price cap will see energy bills rise from £1,738 to £1,849 from 1 April for a typical dual fuel household.
The price cap sets a limit on the maximum price for each unit of energy, meaning that the more energy a household uses, the more it will pay.
Dr Craig Lowrey, Cornwall Insight principal consultant, said: “Households have been hit hard over the past few months, and with bills set to rise for a third consecutive time the pressure is not letting up.
“While we’re not seeing a return to the peak of the energy crisis, the market is more volatile than it has been in quite some time, and households are bearing the brunt of cold weather and low gas storage levels across Europe.”
Below we look at what the price cap is and what could happen to your energy bills in future.
Energy price caps are set by Ofgem and are reviewed four times a year.
The cap limits how much suppliers can charge you per unit of gas or electricity and are based on how much it costs, on average, to get energy to your home. They also set a maximum daily standing charge, the cost of being connected to the grid.
It won’t limit the total bill – this depends on how much energy a household uses.
Caps only limit bills for consumers on a standard variable energy tariff, not those on a fixed rate tariff.
Today’s increase marks a third consecutive price cap increase, with the situation looking unlikely to improve as the year progresses.
Despite Russia’s invasion of Ukraine happening over a thousand miles away, its effects have still been felt closer to home.
Since 2022, energy prices have experienced significant volatility due to the energy crisis triggered by the conflict, as European countries scrambled to replace Russian gas supplies.
However, prices are expected to fall in the short term before rising again.
Analysts Cornwall Insight said earlier this month: “Looking ahead, the announcement of talks between Russian and American officials aimed at ending the Ukraine conflict have seen gas prices fall, and while this has come too late to affect the April cap, the effects are being seen from July 2025 onwards, with prices expected to fall slightly in the third quarter of the year, before rising again in October.”
The Government’s drive to expand renewable energy capacity is also expected to reduce energy bills in the long run, replacing expensive fossil fuels with more affordable sustainable energy and decreasing dependence on the volatile international wholesale market.
However, Cornwall Insight said this transition will “take time, funding, and market reforms, meaning it could be years before households see a decrease in energy costs”.
Supplier EDF’s price cap predictions for the rest of 2025 show some fluctuation in the cap, with £1,839 for July to September and £1,859 for October to the end of December 2025.
A fixed energy tariff means your unit rates and standing charge stay the same for a set length of time, usually a year, agreed in a contract with your energy supplier.
This means whether price caps rise or fall, the unit rate and standing charges you pay remain the same, providing bill payers with certainty about their finances.
To decide whether to move to a fixed tariff, consumers need to look at what is expected to happen to energy prices over the course of a year.
If the price cap drops, being on a fixed tariff may not be the best option as you could be paying more for energy than the standard rate.
And you may be expected to pay exit fees to get out of a fixed tariff deal.
However, should energy prices rise again, you should be shielded from the effects.
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