Ofgem confirms energy price cap rise by 6.4% from April

Energy regulator Ofgem has announced a 6.4% increase of the energy price cap for the period covering April to June 2025.

The energy regulatror says that a recent spike in wholesale prices is the main driver of today’s price rise, accounting for around 78% of the total increase. A small increase in policy costs and associated inflationary pressures make up a further 22%.

The price cap – which sets a maximum rate per unit and standing charge that can be billed to customers for their energy use – will rise by £111 for an average household per year, or around £9.25 a month, over the three-month period of the price cap.

For an average household paying by Direct Debit for dual fuel this equates to £1,849 per year. This is 9.4% (£159) higher than this time last year (£1,690) but £531 (22%) lower than at the height of the energy crisis at the start of 2023, when the Energy Price Guarantee was in place.

Since Ofgem’s last price cap announcement in November 2024, four million customers have moved to a fixed tariff. Now, 11 million people are on a fixed deal and won’t be affected by the change in the price cap. This is the largest movement of customers coming off the price cap and on to a fixed deal since the energy crisis.

Jonathan Brearley, CEO of Ofgem, said “We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households.

“But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.

“Energy debts that began during the energy crisis have reached record levels and without intervention will continue to grow. This puts families under huge stress and increases costs for all customers. We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward.

“We welcome the government’s support for these plans, and their plans to expand the Warm Home Discount, which will also offer financial help to nearly three million more households that need it most.”

Richard Lane, Chief Client Officer at StepChange Debt Charity, said “The increase in the energy price cap will pile more pressure onto households who are already grappling with increases in the cost of living from all angles. New StepChange clients are £2,500 in the red with their energy bills on average, and with council tax and water bills also set to rise shortly, this latest news will heap yet more pressure on them, and millions of other struggling households.

“We strongly welcome Ofgem’s plans and work towards a debt relief scheme which will tackle historic debt, and improve standards on the energy debt pathway. But above all, welcome steps to deal with debt must also be accompanied by targeted intervention designed to deliver long-term affordability to those at risk of fuel poverty, and to provide sufficient protection and ongoing assistance to those struggling with energy payments.”

Independent Age Chief Executive, Joanna Elson CBE said: “Today’s price cap announcement is more bad news for the older people in poverty that have already been subjected to a brutally long and cold winter. We now know that energy prices will rise again by 6%, from an average of £1,738 to £1,849. People in later life on low fixed incomes have stretched their budgets to breaking point during the colder months, and many tell us they don’t have enough money to turn the heating on full stop. Now, their bills rise yet again to amounts they simply cannot afford.

“History cannot be allowed to repeat itself next winter. The UK Government needs to put in place plans that support older people in financial hardship to turn their heating on. Since the changes to Winter Fuel Payment were made in July, our helpline has seen a massive increase in calls regarding the payment, and many of the people we have spoken to have made drastic cutbacks, such as only living in one room and cutting down on food. Far too many older people on low incomes don’t receive Pension Credit and are now falling through the cracks – in the short term, the UK Government should urgently review and widen the financial threshold of the Winter Fuel Payment.

“In the long-term, the UK Government and Westminster need to work together to ensure the financial security of all people in later life. We are calling on the UK Government to work with Ofgem to establish a social tariff for energy that is well promoted and makes bills affordable. This will go a long way in protecting customers on low incomes from future spikes in cost. There also needs to be a drive to increase take up of social security entitlements, and a consensus formed among all the political parties on the adequate income needed in later life to avoid financial hardship. Once this is determined, plans must be put into place to support everyone to receive this amount. Nobody should be left in the cold.”

Richard Neudegg, Director of Regulation at Uswitch said “Millions of households still sitting on standard tariffs, which follow the price cap, are about to see their bills rise for the third time in a row.

“The hat-trick hike of 6.4% in April will add £111 to the average annual bill in yet another price cap blow for standard tariff customers. Consumers can take action to avoid this. If you are still riding the rising rates, now is the time to find a better deal.”

Guy Anker, Personal Finance Expert at Compare the Market said: “Ofgem confirmed this morning that the average dual fuel bill for households not on a fixed deal will rise from £1,738 to £1,849, based on typical use.

“The increase, which will take effect from 1st April, is concerning for many households facing more expensive energy bills as a result. Water bills and council tax are also expected to rise in April, putting further strain on household finances.