On 1st April 2025, Ofgem introduced a new energy price cap, raising it to £1,849 per year for a typical dual-fuel household paying by Direct Debit. This marks a 6.4% increase compared to the previous cap of £1,738 and reflects ongoing pressures in the global energy market.
With many households still feeling the financial pinch, understanding what this means and how to manage energy usage more effectively is more important than ever.
What Is the Energy Price Cap?
The energy price cap is a limit set by Ofgem on how much suppliers can charge customers on standard variable tariffs for each unit of electricity and gas, as well as the daily standing charges. It’s designed to protect those who haven’t moved to a fixed-rate deal from being overcharged in a fluctuating market.
It’s important to note that the cap doesn’t limit your total bill – the more energy you use, the more you pay. But it does ensure you won’t pay above a certain amount per unit, which provides a level of security and predictability.
Breakdown of the New Rates (April–June 2025)
From April through to the end of June 2025, the new rates under the cap are as follows:
- Electricity: 27.03p per kilowatt-hour (kWh), with a standing charge of 53.80p per day
- Gas: 6.99p per kWh, with a standing charge of 32.67p per day
These rates include VAT and are based on average consumption across households in England, Scotland, and Wales. The £1,849 figure is an estimate for a “typical” household, so if your usage is higher or lower, your actual bill will vary.
Why Has the Cap Increased?
The rise in the cap is mainly due to increasing wholesale energy prices, which make up around 78% of the total cost passed on to consumers. Although prices fell towards the end of 2024, they have since risen again due to global factors, including supply constraints and increased demand.
Other elements that influence the cap include network costs, policy charges, operating expenses, and supplier margins. Together, these factors have resulted in the £111 increase seen in the current period.
What’s Likely to Happen Next?
There is some cautious optimism that the price cap will fall again later this year. Energy analysts currently forecast a drop to around £1,735 for the July to September quarter, followed by a slight rise to £1,748 in the autumn and then a small increase again to £1,754 in early 2026.
While these predictions are helpful, they remain subject to change depending on movements in the global energy market. It’s always wise to stay informed about upcoming price cap changes, especially if you’re on a standard variable tariff.
How to Keep Your Energy Bills in Check
Even though the price cap provides some protection, there are still steps you can take to reduce your energy bills:
Need More Advice?
At Reduce My Costs, we’re here to help you navigate rising energy costs. If you’d like tips and guidance, visit our HelpHub, or reach out to one of our team members for a chat today.
