Ofgem Energy Price Cap April 2025: Should You Fix Tariff?

Key Update: Energy Price Cap Increase from April 2025

The UK’s energy regulator, Ofgem, has said that the energy price cap will go up by 6.4% starting on 1 April 2025. Because of this, the total bill for a typical household on a standard variable tariff (SVT) will rise from £1,738 to £1,849 each year.

This increase impacts about 22 million homes in England, Scotland, and Wales. These households depend on default tariffs set by the energy regulator.

Understanding the April 2025 Energy Price Cap Increase

The price cap controls how much energy suppliers can charge for each unit of energy. A unit of energy is measured in kilowatt-hours (kWh). It also sets a daily standing charge for both gas and electricity.

Breakdown of the new April 2025 cap

A typical household energy use, which is 2,700 kWh of electricity and 11,500 kWh of gas each year, will now cost £1,849 every year.

People using prepayment meters will pay a bit less. Their average yearly bill will be about £1,803. On the other hand, those who pay by cash or cheque will have a higher bill. Their average cost will be £1,969 per year.

Why Energy Bills Are Increasing Again in April 2025

The wholesale cost of energy is the main reason influencing the next price cap, as noted by Cornwall Insight. The cap level has increased because of this factor.

• Wholesale gas and electricity prices are going up. They account for about 78% of the increase.
• Policy costs are also rising. This includes fees for environmental and social programs.
• There are inflationary effects on the energy market.

The current price cap has increased, but it is still below the peak of £4,279 that we saw in January 2023 during the energy crisis.

Should You Switch to a Fixed Tariff Now?

Many people are wondering if they should lock in their energy deal after the latest predictions about future price cap levels.

Pros of fixing a tariff now

• You can protect yourself from rising price cap increases.
• It is easier to plan your budget when you have a predictable total bill.
• There is a chance of getting a deal that is cheaper than the next price cap level.

Cons of fixing a tariff now

• If the costs for wholesale drop, you might pay over the cap level in July.
• A few fixed plans charge fees if you decide to change later.

Cornwall Insight’s forecast shows that the next price cap in July 2025 could fall to about £1,756 per year. However, prices are still changing a lot.

Fixed Tariff vs. Standard Variable Tariff: Which Is Better?

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Best Fixed Energy Tariffs Available Now

Many energy suppliers are providing fixed deals. These deals may cost less than the price cap set for April 2025.

The prices change depending on where you are. They also depend on discounts for using dual fuel.

How to Switch Energy Suppliers and Find the Best Deal

1. Look at tariffs using a site that compares all options.
2. Review contract details, like exit fees.
3. Request the switch with the energy supplier you choose.
4. Give meter readings to get correct billing.
5. Be patient for the switch, usually takes 21 days.

Note: Customers who owe money for energy may not be able to switch providers. However, they can still get a fixed deal with their current provider.

How Rising Energy Costs Impact UK Households

• 6.7 million homes owe money for energy.
• The total amount of energy debt is £4 billion.
• In some places, like London and North Wales, standing charges will increase by £20 a year.

Households with low incomes should reach out to their supplier for financial help. They can also find out about government schemes that can assist them.

Government Support Available for Energy Bills

Support schemes for struggling households

1. Warm Home Discount Scheme – Get a £150 discount if you qualify as a low-income household.
2. Winter Fuel Payment – Pensioners can receive between £100 to £300.
3. Household Support Fund – Local councils offer extra financial help to families in need.
4. Energy Bill Grants – Some energy companies provide grants to help with bills.

For people who use prepayment meters, there is additional help available from the Fuel Bank Foundation.

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Future Energy Price Predictions for 2025

• Cornwall Insight thinks prices might go down in July 2025, but they will still be high.
• The global gas markets and policy costs will keep affecting the cap level.
• The energy price guarantee scheme will not come back. This means people have to handle costs by themselves.

Ways to Reduce Your Energy Bills

• A smart meter can help you watch your energy use right away.
• Set your boiler’s flow temperature to 60°C.
• Use your appliances wisely, like washing clothes at 30°C.
• Cut down on daily standing charge fees by using low-energy appliances.
• Draught-proofing may save you up to £60 each year.

Energy Price Cap Trends: 2022 – 2025

The UK energy price cap has changed a lot since 2022. It hit a high of more than £4,000 in early 2023. After that, it started to stabilise. By April 2025, the cap will be £1,849 each year for a typical household that uses both gas and electricity and pays by direct debit.

Key changes:

• Jan 2023: A high point at over £4,000 because of the worldwide energy crisis.
• Mid-2023 – 2024: Slowly going down with some small ups and downs.
• April 2025: A 6.4% rise, raising the limit to £1,849 each year.

This price cap limits the rates you pay for unit usage and standing charges. However, your actual bills can change based on how much energy you use. Future forecasts suggest that prices might go down, but changes in wholesale energy prices still play a big role.

Correct as of 25 February 2025