Energy bills set to rise again next year in another major blow for millions of households
Energy bills are predicted to rise again next year in another blow for millions of households.
The Ofgem energy price cap is already confirmed to be rising to £1,738 a year for the typical household paying by direct debit from January – but in their latest analysis, experts at Cornwall Insight say they expect it to increase again to £1,762 from April. Ofgem updates its energy price cap every three months.
Cornwall Insight says its prediction is based on “economic and geopolitical factors” including the ongoing war in Ukraine, Donald Trump becoming US President again and “question marks over effects on economic growth in general”. It's worth keeping in mind that these are just predictions and Ofgem will not confirm its April price cap until February 25, 2025, at the latest.
The price cap does not actually limit how much you can pay for energy. If you use more energy, you'll pay more – or use less energy, and your bill will be less. What the price cap does is, it sets the maximum unit price you can be charged for gas and electricity, as well as the maximum daily standing charge.
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Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “ Energy bills in 2025 are shaping up to reflect a perfect storm of regulatory changes and market turbulence, in addition to any broader sector reforms put forward by the new Government. While the wholesale market will remain a key driver of prices, Ofgem's reforms and the introduction of new charges could raise costs further for households.
“There are a lot of unknowns, and while significant rises in price are currently unlikely, the scale of any increases will depend on how the market and the reforms unfold. What we do know is that the market is unlikely to lower bills, and affordability and fuel poverty will continue to be a pressing issue. This underscores the need for policymakers and suppliers to prioritise supporting vulnerable consumers.”
Ben Gallizzi, energy expert at Uswitch.com, said: “This predicted rise in April’s price cap would mark a third consecutive hike for energy prices, adding to the current pain for households. This increase could mean the average household on a standard variable tariff would pay 1% more on their rates from April – on top of the 1% increase in January that we’re yet to pay.
“This is an early prediction so this 1% rise isn’t guaranteed, but energy prices remain uncertain. There are now a range of fixed deals available that are significantly cheaper than the predicted price cap for January, so it is well worth running a comparison to see how much you could save.
“Right now, the average household could save up to £112 per year against the current price cap by switching to a twelve month fixed deal. Consumers who are worried about paying their energy bill should check what energy help they are eligible for, and contact their supplier who may be able to offer support.”
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