If you’ve been keeping an eye on your energy bills, you’ll know that the Energy Price Cap has been a bit of a lifesaver since it was introduced in January 2019. It’s helped make sure that millions of households aren’t paying over the odds for their gas and electricity. But, come 1st April 2025, the cap is set to rise by 6%. So, what does that mean for you? Let’s break it down.

What’s the Energy Price Cap, Anyway?

Introduced by Ofgem, the Energy Price Cap was designed to stop energy suppliers from charging sky-high rates for gas and electricity, particularly for households on default or standard tariffs (which, let’s face it, most of us are on). Before the cap, people on these variable tariffs often found themselves paying way more than necessary, especially when energy prices spiked.

The cap limits the amount energy companies can charge you per unit of gas or electricity, plus it sets a maximum daily standing charge (that’s the fee you pay just to be connected to the grid). The cap is based mainly on wholesale energy prices, which are what suppliers pay for the energy they provide.

It’s important to remember that this cap only applies to standard and default tariffs, which is the kind most people end up on. If you’re on a fixed-rate plan, you might not be directly affected by the cap, but changes to the overall energy market can still affect your bills.

What’s Behind the Rising Energy Prices?

The energy market has been in turmoil in recent years, with prices soaring towards the end of 2021 and hitting a peak during the winter of late 2022 and early 2023. Although costs have gradually fallen back over the past year or so, they’re still painfully high—many households are paying nearly double compared to pre-crisis levels.

The primary reason for this is the surge in wholesale energy prices, the rates suppliers pay to purchase gas and electricity. When the crisis began in 2021, wholesale prices skyrocketed as countries lifted COVID-19 lockdowns. The reopening of businesses and industries caused a massive spike in energy demand, which suppliers struggled to meet. On top of that, the conflict between Russia and Ukraine sent wholesale prices even higher. As many countries reduced or cut off Russian gas imports in response to the war, energy supplies tightened further, driving up costs.

There are several factors driving these higher wholesale prices:

• Global Supply and Demand: The global demand for energy has increased, especially after the COVID-19 pandemic, as industries and economies have started to recover. At the same time, there have been disruptions to supply, which has led to price hikes.
• Geopolitical Tensions: Conflicts and political instability in energy-producing regions (like Russia’s war with Ukraine) have led to energy supply shortages and further increased prices.
• Cost of Production: The cost of producing energy, especially from sources like natural gas, has also risen, contributing to higher prices across the board.
• Energy Transition: As the UK shifts towards greener energy sources, the costs associated with renewable energy infrastructure and transitioning away from fossil fuels are also impacting prices.

While wholesale prices have now dropped significantly from their crisis peak, they remain well above pre-2021 levels. Factors such as global supply and demand fluctuations, rising production costs, and the ongoing transition towards greener energy sources continue to keep prices elevated.

What’s Changing on 1st April 2025?

From 1st April 2025, the Energy Price Cap will increase by 6%, meaning the average annual bill for a typical household paying by Direct Debit will rise to £1,849. This change is largely due to rising wholesale energy prices, influenced by things like global supply and demand, political factors, and the cost of production.

But why exactly is the Energy Price Cap going up? Well, the main reason for the increase is that the wholesale price of energy has been steadily rising. This means energy companies have to pay more for the gas and electricity they buy on the open market, and as a result, the cost of supplying energy to customers has also gone up.

To see how your bill will be affected, see the Energy Price Cap calculator.

Energy Price Cap Rates: 1st April – 30th June 2025

If you’re on a standard variable tariff (also known as a default tariff) and pay by Direct Debit, 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

These rates are the average across England, Scotland, and Wales and include VAT.

Gas Rates

• Unit rate: 6.99p per kilowatt hour (kWh)
• Standing charge: 32.67p per day

Again, this is the average rate across England, Scotland, and Wales, including VAT.

So, if you’re on a standard tariff, expect these rates to apply to your energy bills throughout the spring.

What Does This Mean for You?

So, what’s this going to mean for your wallet? Well, if you’re on a standard or default tariff (which most of us are), your energy costs will go up a bit. But don’t panic, it’s not an automatic increase for everyone. The exact amount you’ll pay depends on how much energy you use. So, if you’re using more energy than average, your bill will be higher too.

How Can You Manage Rising Energy Costs?

Even though the cap is going up, there are still things you can do to manage your energy bills:

1. Switch to a Fixed-Rate Tariff: If you’re still on a standard variable tariff, it could be worth looking into fixed-rate deals. They can offer more stability and protect you from sudden price hikes, even if they don’t completely prevent the rise.
   
2. Cut Down on Energy Use: Simple changes, like switching off lights when you don’t need them, using energy-efficient appliances, and cutting back on heating or cooling when possible, can help lower your overall consumption.
   
3. Shop Around for a Better Deal: It’s always worth shopping around to see if you can get a better deal from a different supplier. Even if you’re on the price cap, some providers might offer slightly better rates or additional benefits.
   
4. Look Out for Support: Keep an eye on any government schemes or discounts that might be available to help with energy costs. Many households could qualify for grants or other forms of financial support.
   

Wrapping It Up

The rise in the Energy Price Cap coming on 1st April 2025 is a reminder that energy prices are still on the rise, but it doesn’t mean you have to let your bills spiral out of control. By being proactive, whether that’s switching tariffs, using energy more efficiently, or seeking out government support; you can stay in control of your costs. If you’re an Electric Vehicle owner there it also changes to road tax that will now apply to you and your vehicle.

At the end of the day, staying informed and making small changes can go a long way in keeping your energy bills manageable, even with the price cap increase.