Energy price cap will rise by 6.4% from April

PRESS RELEASE

FOR IMMEDIATE RELEASE: 0700HRS, TUESDAY 25 FEBRUARY 2025 

Energy price cap will rise by 6.4% from April 

• Our reliance on volatile international gas markets has increased wholesale prices and continues to impact household bills 

• Regulator welcomes Government backing for debt relief scheme that could see up to 1.8 million households receive financial support   
• Four million customers moved to a fixed tariff since Ofgem’s last announcement, and will not be impacted by this price rise 

Energy regulator Ofgem has today [Tuesday 25 February 2025] announced a 6.4% increase of the energy price cap for the period covering April to June 2025.   

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, says: “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. 

“If anyone is worried about paying their bills, I would urge them to reach out to their supplier to make sure they’re getting all the help they can. Where possible, switching or fixing tariffs now could also help to bring costs down and provide certainty over coming payments.” 

From 1 April, Britain’s standing charges will reduce for most households, but some regional variation remains. As a result, some households will see a small increase in standing charges of up to £20 per year for a typical dual fuel consumer. This is due to changes in network costs – the price paid to transport energy around the country and power Britain’s homes.  

Ofgem is also today welcoming the government's support of its plans to tackle the growing impacts of rising debt in the energy system and create lasting change in the way debt is managed and customers in debt are supported.  

The plans could see a Debt Relief Scheme established, which suppliers would use to either write off debt that is so significant it will never be paid back or help pay off debt by ‘debt matching’ customer payments. The Debt Relief Scheme would form part of a wider package of measures, supported by the Government’s proposed expansion of the WHD, which aims to reduce debt to levels seen before the energy crisis reducing costs to all consumers by £25-30 per year*. 

The regulator has also set out ambitions to improve the standard of service from suppliers when supporting customers that are struggling to pay their bills. The proposals would make it easier for consumers to get help from charities and debt support agencies and ensure a consistent approach is taken across the board, to help to limit the risk of unsustainable levels of debt building up in the future once again. 

The plans have also received backing from a number of stakeholders, who recognise how important the scheme could be for helping those in severe payment difficulty to get back on track, while also encouraging more onto repayment plans, driving down debt costs for all. 

The regulator continues to encourage customers to look for the best deal to help keep their household bills down and to consider switching to a new supplier or fixing to a tariff with their existing supplier. There are a number of fixed, Direct Debit tariffs tracking below the April price cap level, with savings of around £50 available compared to the upcoming price cap level. 

ENDS 

Notes to editors 

• *The debt allowance in the price cap was approximately 2.5% of the total bill before the energy crisis. At recent cap levels this would translate to £40-45, which is roughly £25-30 below the current level in the cap. 

Ofgem is also today announcing: 

• An extension of the debt allowance, which supports suppliers in helping millions of consumers get on top of their bills and stay on supply, reducing the physical and emotional harm that can result from self-disconnection. This comes as debts hit record levels of £3.8billion.  

• The Network Charging Compensation Scheme allowance in the energy price cap. This is in response to government policy, which grants compensation on electricity network charges to energy intensive industries using Great Britain’s electricity grid. 

• For more information on the extension of the debt allowance and additional support credit, please see here. 

• For more information on the decision regarding the Network Charging Compensation Scheme Allowance Consultation, please see here. 

• The cost of transporting energy around the country differs from place to place. A breakdown of the regional standing charge variation can be found on Ofgem’s website here. 

• Ofgem is currently consulting on proposals to require all suppliers to offer a low or no standing charge tariff. This will offer consumers more choice and control over how they pay their bills and may better suit low energy users. For more information on this, please see here.  

• On Thursday 6 February, Ofgem closed its debt standards and debt relief solution consultation and is working through the responses. The intent is that any changes made would be in place for next winter.  

• Ofgem recently launched its consumer confidence programme which aims to ensure fair prices, a high-quality service, low-cost transition to net zero and resilient sector.  
• The work will focus on defining the outcomes it wants the sector to deliver, redesigning the regulations and incentives to deliver those outcomes, and ensuring Ofgem has the right powers. This builds on Ofgem’s Consumer Interest Framework which aims to ensure fair prices, a high-quality service, a low-cost transition to net zero and a resilient sector. This includes rules to make contacting suppliers for help with bills quicker and easier. 

Energy price cap | Ofgem   

The energy price cap was introduced by the government and has been in place since January 2019. Ofgem is required to regularly review the level at which it is set.  

It ensures that an energy supplier can recoup its efficient costs while making sure customers do not pay a higher amount for their energy than they should. The price cap, as set out in law, does this by setting a maximum that suppliers can charge per unit of energy, including a daily standing charge.   

New overall number of domestic customers on Standard Variable Tariffs (SVT) – ‘around 22 million’ of which:   

• New no. of SVT Direct Debit customers – ‘around 13 million’    

• New no. of SVT Standard Credit customers – ‘around 5 million’   
• New no. of SVT PPM customers – ‘around 4 million’    

Total number of customers on fixed tariffs ‘around 11 million’ (with the vast majority being non-PPM)   

*Latest Financial Responsibility RFI data is for January-25. Tariff and customer Account RFI data is as of January-25 (used to calculate the SVT payment splits).