Energy bills are set to rise by an average of 6.4% on 1 April, due to the latest energy price cap coming into effect.
Ofgem’s new price cap will take the typical dual fuel bill to £1,849 per year, an annual increase of £111, although the exact price you pay will depend on your usage. The price cap is reviewed quarterly, meaning this will only cover April to June.
The rise follows a 1.2% hike in January and a 10% hike in October 2024, due to volatile wholesale prices. The higher energy bills will be particularly felt by many pensioners after losing their Winter Fuel Payment last year.
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The latest energy price predictions suggest that there could be some small reprieve as bills may decrease in the summer months.
The price cap applies to around 26 million households who are on a variable energy tariff. It is updated every three months by the energy regulator Ofgem.
Some customers opt for fixed energy deals in an attempt to shield themselves from price hikes, but taking one out could be a risk depending on what happens to the price cap in 2025.
We look at the latest energy price forecasts about where bills are headed this year.
Will energy prices go down in 2025?
Energy consultancy Cornwall Insight, which is well regarded for its accurate forecasts, has predicted that bills will fall in the third quarter of the year.
The consultancy suggests the average yearly price of energy will drop to £1,756 from July, down by around 5%.
If the energy price cap is revised down, it will mark the first time in a year as energy prices are currently on their third consecutive hike.
Ofgem will announce the July price cap on 27 May.
Cornwall Insight says a possible easing of hostilities in Ukraine, a development which came too late to influence the April price cap, could potentially lead to lower energy prices from July onwards.
This is among the reasons Cornwall Insight has cautiously lowered its prediction for the July price cap, but remains sensitive to the high levels of volatility in the energy market, noting “it is extremely likely that forecasts will change multiple times before the July cap is set in three months”.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “While bills are currently expected to dip slightly in July, we are talking by a few pounds - not the meaningful drop households will be hoping for.
“Ultimately, if we want to reduce bills substantially and sustainably, we need to reduce our reliance on imported gas, through increasing the number of reliable renewables on the grid.
“However, this is no small ask when we also consider the costs in doing so and also the time associated with market reforms. However, unless we want to remain in the perpetual cycle of volatile markets and increasing bills, this is the only long-term solution.”
Energy bills could also change this year depending on whether Ofgem introduces new rules on standing charges. The regulator is currently consulting on plans to force energy firms to offer tariffs that have zero standing charge.
Meanwhile, the government launched Great British Energy last summer in an attempt to reduce the UK’s reliance on other countries for its energy supply, but it will be a long time before consumers see the effects of this on their bills if indeed the project is a success.
What is the long-term outlook for energy prices?
Cornwall Insight says it could be several years before energy bills go back to where they were before 2020.
It predicts that prices will remain relatively flat over the next three years, before beginning to drop away from 2028. By then, it expects improved gas supplies to be better supported by bolstered renewable energy output.
A possible end to the war in Ukraine will also help alleviate some price pressures on energy, according to the consultancy.
However, they say wholesale prices are likely to remain well above averages seen from the last decade, even by 2031.
Once inflation is taken into account, they could still be more than 10% above the most expensive energy prices from the late 2010s.
Cornwall Insight puts this down to a continued European reliance on gas imports.
What’s happening with standing charges?
Ofgem is proposing to force energy firms to make a dual pricing offer – with, or without, a standing charge – to give customers greater choice and reduce energy bills for some households.
Many billpayers consider standing charges to be unfair as they have no control over how much is charged. It prompted a review by the energy regulator last year, and when it asked for the public's views it received a massive response of 30,000 submissions.
Ofgem has now launched a consultation, which runs until 20 March, looking at a system of two tariffs, where the one without a standing charge would have a higher price for each unit of energy. Both would fall under the existing price cap system.
However, the plans have been criticised by some charities and energy groups for their complexity; they say vulnerable customers could unwittingly make the wrong choice, meaning they pay more for their gas and electricity. They also argue that standing charges won’t become more affordable, they will simply be shifted to another part of the energy bill.
Should I fix my energy?
Fixed energy deals have become increasingly competitive compared to the Ofgem energy price cap. At the moment, the way to approach the market depends on your attitude to risk.
Fixing now risks locking in rates that could become uncompetitive if prices drop in July and October. But, if prices continue to rise, you could have saved money by fixing.
If you value cost certainty, opting for a fixed deal means you will know exactly what your outgoings will be for the next 12 months. So, MoneyWeek's advice is to weigh up the options on the market and assess whether fixing meets your financial needs.
What are the current energy prices?
The current Ofgem energy price cap, which runs from 1 January to 31 March 2025, dictates the unit price that suppliers can charge to customers on a variable tariff.
It is set at £ a year for a typical household that uses electricity and gas and pays by Direct Debit. This is a rise of 1.2% compared to the cap that covered 1 October to 31 December 2024 (£1,717).
This annual bill reflects the average use for a typical customer. So, if you use more gas and/or electricity, perhaps because your home is bigger than average or you have high-energy appliances, your bill will be higher than this.
Here are the average unit rates per kilowatt hour (kWh) and daily standing charges (these vary by region) under the current price cap, for Direct Debit bill-payers:
- Gas: unit rate - 6.34p per kWh, standing charge - 31.65p per day
- Electricity: unit rate - 24.86p per kWh, standing charge - 60.97p per day
How to keep energy bills low
To help you keep energy bills low, we have gathered some top tips in our article looking at 14 ways to reduce your energy costs.
If you're interested in the best ways to improve your energy efficiency and reduce costs, we explore: radiators vs electric heaters, heated airers vs tumble dryers, and wood burning stoves vs central heating.
How to get help with paying your energy bills
If you’re struggling to afford your energy bills, don’t bury your head in the sand and build up a big debt.
Your energy supplier may offer support. Some suppliers have hardship grants. For example, Octopus Energy has Octo Assist and British Gas has the British Gas Energy Trust.
You may be able to get a repayment holiday. This is where you ask your supplier to pause your repayments for a short amount of time to give you some breathing space.
Another option is to agree to an affordable payment plan. You’ll pay fixed amounts over a set period of time, which will cover what you owe plus an amount for your current use.
If you’re on benefits, you might be able to repay your debt directly from your benefits through the Fuel Direct Scheme. According to Citizens Advice, the Fuel Direct Scheme can be a good option if you can’t agree on a plan to pay back your debt, and it’s usually better than getting a prepayment meter.
Ofgem’s energy price cap history
Here are the historical price changes to Ofgem’s energy price cap, so you can see how energy bills have increased and decreased over the past few years.
Price cap period | Ofgem energy price cap | Price cap change vs previous period |
|---|---|---|
April - June 2025 | £1,849 | +6.4% |
January - March 2025 | £1,738 | +1% |
October - December 2024 | £1,717 | +10% |
July - September 2024 | £1,568 | -7% |
April - June 2024 | £1,690 | -12% |
January - March 2024 | £1,928 | +5% |
October - December 2023 | £1,834 | -7% |
July - September 2023 | £1,976 | -37% |
April - June 2023 | £3,116* | -23% |
January - March 2023 | £4,059* | 20% |
October - December 2022 | £3,371* | 80% |
Summer 2022 | £1,877 | 54% |
Winter 2021/22 | £1,216 | 12% |
Source: Energyhelpline. *This was replaced by the £2,500 Energy Price Guarantee
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