Households are braced for another blow to their finances as energy bills are set to soar.
An announcement is expected from energy regulator Ofgem this week on the new energy price cap running from April to June this year.
Although the details have not yet been revealed, energy analysts Cornwall Insight are predicting we will see another rise of up to 5 per cent, about £7 a month for the average consumer.
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.”
Ahead of this increase, some consumers may be considering moving to a fixed tariff to try and limit the impact on household bills.
We take a look at the detail and the advice on offer.
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.
The current energy price cap, for 1 January to 31 March 2025, is set at £1,738 per year for a typical household who use electricity and gas and pay by Direct Debit.
This is an increase of 1.2 per cent compared to the cap set between 1 October to 31 December 2024 (£1,717).
The next price cap, for 1 April 2025 to 30 June 2025, will be announced by Ofgem by Tuesday 25 February.
Cornwall Insight has forecast that it will rise by 5 per cent, which would mean the price cap will be £1,823 per year for a typical dual fuel household.
This is an increase of £85 for a typical consumer.
It would mark a third consecutive price cap increase, with the situation looking unlikely to improve as the year progresses.
Energy supplier EDF has also forecast an increase to £1,855 per year – slightly higher than Cornwall Insight.
According to Cornwall Insight there is some good news ahead for energy customers.
In analysis published this month, it stated: “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.”
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 that the standard rate.
And you may be expected to pay exit fees to get out of a fixed tariff deal.
Based on current predictions for the energy price, Martin Lewis, founder of MoneySavingExpert, said: “If you find a fix for up to 8 per cent more than the current (Jan to Mar) Price Cap, it’s predicted you’ll save over the year compared with staying on the Price Cap.”
Octopus Energy has advised customers it could be worth moving to a fixed tariff in its February guidance.
It stated: “It might be worth looking at a fixed tariff – right now, fixing your rates works out a little cheaper than staying on a flexible tariff.
“Of course, that could change in the future, so check out our price cap predictions page for a sense of how prices could fluctuate over the year.
“Just keep in mind, there are no guarantees.”
And comparison site USwitch said: “At the time of writing (February 2025), most people who haven’t switched in a while are likely to be able to save money by getting a fixed energy deal.
“This is because they’re probably on their supplier’s “default” tariff where prices are set by the price cap.
“Price cap rates are currently high but there are savings of about £100 a year (if not more) available on fixed energy deals that are currently available.”
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