Energy Price Cap to Rise by 6.4%; What It Means for Households

2025-03-03

The energy price cap is set to rise by 6.4% from 1 April, increasing the average annual bill for a typical household to £1,849, up from £1,738. This adjustment, announced by Ofgem, reflects higher wholesale energy costs and other factors such as distribution charges. While the daily standing charge for electricity is dropping, households using more energy could face increases of 7-10% on their bills.

Martin Lewis, founder of Money Saving Expert, has urged households to consider switching to a fixed energy deal to avoid the upcoming price hike. Speaking on BBC Radio 4’s Today programme, Lewis criticised Ofgem’s “weird time lag price cap mechanism,” which bases current prices on higher wholesale costs from December to February. He suggested that a ‘social tariff’ should replace the current system, offering cheaper rates to those unable to engage in the competitive market.

Fixed deals from providers such as Ovo Energy and Outfox the Market are currently 3.9-4.1% below the existing price cap, potentially saving households around 10% in the coming quarter. However, analysts predict that energy prices could fall again in July, with Cornwall Insight forecasting a drop to £1,756 for a typical annual bill.

Ofgem’s chief executive, Jonathan Brearley, acknowledged the “unwelcome” rise but encouraged consumers to explore fixed tariffs for payment certainty. Around four million households have already fixed their energy deals in recent months.

The price cap increase coincides with other rising costs, including water bills and council tax, adding further pressure to household budgets. Charities warn that millions are already in energy debt, with Citizens Advice reporting that 6.7 million people in England, Wales, and Scotland owe nearly £4bn to suppliers.

For those struggling to pay, Ofgem advises contacting suppliers for support, while the government has announced plans to extend the Warm Home Discount scheme next winter, offering £150 off energy bills for eligible households.

In the meantime, experts recommend practical steps to reduce energy usage, such as lowering boiler flow temperatures, using LED bulbs, and air-drying laundry. These measures can help mitigate the impact of rising costs as households brace for the April price hike.