The UK energy price cap is set to rise from 1 April to 30 June 2025, bringing with it higher costs for households. Set by Ofgem, the energy regulator, the price cap limits how much energy suppliers can charge for each unit of energy and standing charges on default tariffs.
The new cap has been set at £1,849—a 6.4% increase from the previous cap, meaning the average household could see an extra £9 added to their monthly energy bill over the next three months. This guide breaks down what the price cap is, why energy costs are rising, and how the UK compares with other European countries.
What Is the Energy Price Cap?
The energy price cap sets the maximum amount that energy suppliers can charge customers on default tariffs for:
- Each unit of energy (gas or electricity)
- Standing charges (a fixed daily cost to be connected to the grid)
The quoted figure of £1,849 represents the projected annual cost for a typical household, but actual bills can vary based on factors like:
- Energy usage
- Region
- Payment method (e.g., direct debit, prepayment meter)
The cap is reviewed every three months, with the next update expected in May 2025, which will determine prices from July to September 2025.
Why Are UK Energy Bills Rising?
The latest rise in energy costs is largely due to the global increase in wholesale gas prices. Since the UK’s energy prices are tied to the global market, international events significantly affect the cost of gas and electricity at home.
Key Reasons for Rising Gas Prices:
- 15% increase in wholesale gas prices compared to the previous price cap period
- 80% of the price cap rise is driven by global gas price increases
- The UK’s heavy reliance on gas for energy generation exacerbates the price increases compared to other European countries
Why Have Global Gas Prices Increased?
Several international factors have contributed to the sharp rise in gas prices:
- Russia-Ukraine conflict: The pipeline delivering Russian gas through Ukraine was shut down at the beginning of 2025, cutting off a significant gas supply for Europe.
- Increased global demand: Global demand for gas has surged, putting pressure on supply chains and driving prices up across Europe.
- Market uncertainty: Geopolitical tensions and disruptions in supply routes have caused uncertainty in the energy markets, leading to price volatility.
How Does the UK Compare to Other European Countries?
The UK is experiencing higher energy prices compared to some European nations due to its reliance on gas. Here’s how it stacks up against other countries:
- Norway: Relies mostly on hydropower, resulting in lower energy costs.
- France: Historically invested in nuclear power, helping to keep electricity prices more stable.
- Spain: Warmer climate reduces heating costs, and heavy investments in renewable energy (solar and wind) have helped keep prices down.
The UK’s Plan for Cheaper, Cleaner Power by 2030
The UK government is working on reducing reliance on gas by investing in renewable energy. The goal is to transition to a system based on homegrown clean energy sources, which could help lower bills in the long term.
Key focus areas include:
- Expanding wind and solar energy capacity
- Increasing investment in nuclear power
- Improving energy efficiency in homes and businesses
What Does the Price Cap Mean for You?
While the £1,849 figure reflects the annual cost for a typical household, your actual energy bill will depend on:
- How much energy you use
- Where you live in the UK
- Your chosen payment method
For the average household, this increase means:
- Around £9 more per month compared to previous months
- Higher bills particularly for those who rely heavily on heating or electricity
The latest rise in the UK energy price cap reflects global factors, particularly the rise in wholesale gas prices due to geopolitical events like the Russia-Ukraine conflict. While energy bills are expected to remain high in the short term, the UK government’s push towards renewable energy could lead to more stable and affordable prices in the future.
Until then, households should monitor their energy usage, explore fixed-rate tariffs, and look into energy-saving solutions to reduce the impact of rising prices.
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FAQ’s
What is the UK energy price cap?
The energy price cap limits the maximum amount energy suppliers can charge UK customers on default tariffs for each unit of energy and standing charges.
How much will my energy bill increase in 2025?
The new energy price cap could add around £9 per month to a typical household’s energy bill between April and June 2025.
Why are UK energy bills rising?
UK energy bills are rising due to global increases in wholesale gas prices, driven by geopolitical events and increased demand.
How does the UK compare to other European countries on energy prices?
Countries like Norway and France have lower energy costs due to their reliance on hydropower and nuclear energy, while the UK’s dependence on gas leads to higher bills.
When will the next energy price cap be announced?
The next energy price cap announcement is expected in May 2025 and will set prices for the period from July to September 2025.
