April Price Cap Increase
Ofgem have announced the latest price cap increase. From 1stApril 2025, households on the price cap can expect to see a 6.4% increase to their energy bills, but what does this mean?
When we talk about the price cap, we can use percentages or average annual cost. For a “typical” household who pay on direct debit and have both gas and electric, they can expect to see bills rise from £1738 per year, to £1849 per year. The “typical” household makes a lot of assumptions about your usage, so your actual bills will vary from this number, but it gives a realistic idea.
The price cap varies by region and by payment method. Throughout this article we will be using the national average for direct debit users. You can find the rates per region on the Ofgem website, here, and the average cost per payment method here.
Who does this affect?
Households who are currently out-of-contract with their energy supplier will be on the standard variable rate tariff that is adjusted according to the price cap. That means that if you haven’t chosen a contract with your energy supplier in the last couple of years, then you will be affected.
Some people who are in-contract could still be affected depending on their chosen tariff type. Many suppliers currently have tracker tariffs on the market: these work by moving inline with the price cap but at a set percentage below the price cap, or with a max limit on your cost. For example, a customer can sign on to a 12-month tracker tariff contract that is set at 2% below the price cap. This means that if the price cap increases, so will your bills but, for the next 12 months, you will always pay 2% less than the price cap.
How does this compare to previous months?
The price cap is currently set in 3-month periods, so the 1stApril – 30th June has increased 6.4% from the 1st January – 30th March period. To compare previous months, it’s best to use the typical household figure.
Over the last couple of years, we had been seeing a price cap decrease during the spring/summer months. So, in April 2024 the typical household bill on the price cap was £1690 (compared to the new April 2025 price cap at £1849). However, at the height of the energy crisis, when the additional Energy Price Guarantee had to be brought in, we saw typical energy bills at £2500 for 9 months straight.
Why has it increased?
The answer is that wholesale energy prices have increased, so what we pay for energy has had to match the cost increase, but it’s not as simple as it seems.
What we pay for electricity or gas is broken down into two parts: the standing charge and the unit rate. The standing charge is a flat day rate, that everyone pays just for having their home connected to mains gas or the electricity grid. The unit rate is the amount we pay per unit of energy we use, so this is where you can save money by being energy efficient.
In the January-March quarter, we saw electricity standing charges at 60.97p per day and gas standing charges at 31.65p per day, which meant that a dual-fuel household was paying 92.62p per day before they even used any energy. The new price cap actually sees a decrease in the electricity standing charge (down to 53.80p) and only a slight increase in the gas standing charge (up to 32.67p). So dual-fuel households will see a 6.15p decrease in their daily cost.
What can I do?
As explained above, most of this increase will be seen on your unit rate, so people who typically use more energy will be more affected by this increase. The good news is that, as we move into Spring, you will naturally see a decrease in your usage: lights can stay off longer due to sunlight through the windows, you can hang your washing outside instead of using the tumble-dryer, your heating won’t need to be on as often due to warmer weather, and you might want to be outside more instead of at home with the TV on. Now is the best time to look into your energy efficiency, whether that’s through insulating your home or through smaller changes, it will make a difference.
You can check out our website for schemes available in your area, to see if you qualify for free or discounted insulation, or perhaps a heating upgrade to get it working more efficiently. You can also check our resources page to learn more about small changes you can make in the home for free, and cheaper items you can fit yourself to help reduce your usage.
Other than that, one of the most effective ways to avoid the price cap increases is by fixing your tariff. There are a number of different tariff types out there, so it’s worth having a look at what your current supplier, and all other suppliers, are offering.
If you need advice on how to reduce your energy consumption, what schemes are available to you, what type of tariffs are available, or any other energy-related questions, then you can call us for free on 0800 988 2881.
