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The Ofgem price cap isn’t a total limit on your bill, and instead it limits the unit cost of energy. So the more you use, the higher your bills will be.
The current price cap means the average annual energy bill costs £1,738 and it will remain at this level until 31 March. The price cap will increase from 1 April by 6.4%, pushing bills up to £,1849 for a typical household, until 30 June 2025.
If you’re an average energy user, your bills may be around 9% higher than this time last year, when the price cap was £1,690.
In May, Ofgem will announce whether energy prices are going up or down again from July 2025. Cornwall Insight, the independent energy analyst, is currently predicting that the price cap will drop slightly in the third quarter of 2025. However, the wholesale energy market remains volatile and energy prices could rise again from October.
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Why are energy prices so high?
Our energy bills are higher than before the coronavirus pandemic because wholesale gas prices – the amount energy suppliers pay for gas – have skyrocketed.
The coronavirus lockdowns, cold winters, and geopolitical issues, such as Russia’s invasion of Ukraine in early 2022 and the continuing conflict in the Middle East, are just some of the factors that have driven up the cost of energy.
When wholesale gas prices increase, suppliers have to pay more for energy.
Suppliers pass on these higher costs to households by increasing how much they pay for the energy they use, but the Ofgem energy price cap limits how much they can pass on.
While wholesale energy prices have largely fallen from recent historic highs, they are still much higher compared to just a few years ago. When the price cap goes up, as it has since October 2024, it usually reflects continuing volatility in gas prices.
Ofgem has said that we shouldn’t expect energy prices to go down to pre-2022 levels and that volatile gas prices are likely to be a long-term problem.
When does the energy price cap change?
The energy regulator Ofgem sets the energy price cap. It aims to ensure that customers are charged a fair price for their energy. It is reviewed every three months and any changes come into force in January, April, July and October.
The cap is the maximum suppliers can charge households for each unit of gas and electricity used. It only applies to variable and prepayment tariffs, not fixed-rate tariffs.
From 1 January to 31 March, the price cap for a typical household paying by direct debit is £1,738. Your actual bill will vary depending on how much energy you use, where you live and how you pay for your energy.
From 1 April to 30 June 2025, the cap will increase to £1,849, a 6.4% increase from January’s cap.
This cap only applies to England, Wales and Scotland. In Northern Ireland, the energy market works differently and there is no equivalent price cap.
Be aware that the price cap is not the maximum you can pay for your energy. It limits the cost of each unit of gas or electricity you use, not your total bill.
Since January 2024, Ofgem has calculated the price cap using revised typical energy usage values. These have changed from 2,900 kWh to 2,700 kWh for electricity and 12,000 kWh to 11,500 kWh for gas.
One reason for this change could be that households have become more energy efficient. But it also reflects that many households have been limiting energy usage, in an attempt to combat rising prices.
What is the cap if I’m on a prepayment tariff?
The price cap for customers on a prepayment meter is £1,690 from January to March, rising to £1,803 from 1 April 2025 – a similar sized increase to the one affecting direct debit customers.
However, Ofgem has ensured that prepayment customers who get their gas and electricity from the same supplier will continue to pay less than direct debit customers. Standing charges have been reduced for prepayment customers to promote fairer pricing.
A consultation is currently underway which could see energy providers required to offer zero standing-charge tariffs, which would likely have a higher unit rate. These tariffs could benefit people who live alone or have low energy usage.
Are energy prices going down?
Energy prices are going up again in April 2025, with the cap increasing by £111 from £1,738 to £1,849 for typical customers paying by direct debit. This increase will add around an extra £9 per month to bills.
Cornwall Insight is currently predicting that the cap will go down slightly in July 2025 if geopolitical tensions ease. However, from October 2025, it predicts the cap could rise again.
While Ofgem can reduce the price cap when wholesale gas prices fall, increases in the cap reflect those higher wholesale prices. Cornwall Insight says UK energy prices are uncertain because of Ofgem’s ongoing consultations and global conflicts affecting the energy market.
Should I fix my energy?
When the price cap fell in 2024, more suppliers started offering fixed-rate tariffs for both new and existing customers.
Fixing may be worth considering if you find a deal that beats the price cap and if you prefer to know exactly what you will pay for your energy each month. Ofgem is encouraging customers to consider whether a fixed deal is right for them, as fixed tariffs can provide certainty for monthly expenses and may work out to be cheaper than the price cap.
Ofgem also says that you should look at how you currently pay your energy because moving to a different method of payment could save you money – for example from standard credit to direct debit.
If you’re thinking about fixing, you can compare tariffs and get a personalised quote based on the energy that you use. Make sure you check the terms of the tariff and any exit fees that may apply.
Fixing does come with caveats. Not every tariff or deal will be available to new customers, meaning you may have to be with the supplier already or switch to them first to fix your prices.
Fixing could include additional fees or requirements, such as taking out an extra service with the provider or managing your account online.
With fixed tariffs typically lasting 12 months, you need to think about how prices might move over the entire year – because the wholesale energy market remains volatile, there’s no easy answer. Cornwall Insight, the independent energy analyst, is currently predicting that the price cap could go down in the second half of 2025. This could potentially make price-capped energy deals cheaper.
If you’re already locked into a fixed deal that’s more expensive than the price cap, it may be worth seeing if you can switch to a cheaper variable tariff or a cheaper fixed deal. But, if you do decide to leave your current fix, check if you need to pay any penalty fees.
Sam Bromley, Lead Writer and Personal Finance Expert at NerdWallet
What our Nerds say…
“When deciding whether to go for a fixed deal consider how comfortable you are with the fact that the cap could fall as well as rise. If this happens, you may be locked into paying more for your energy than if you had stayed on a variable tariff, or waited for a more competitive fixed-rate tariff. And depending on the tariff, savings may be slim.”
» MORE: Types of energy tariffs explained
NerdWallet has partnered with Love Energy Savings to provide you with the latest business energy deals from leading UK providers, including:
What if I can’t afford my energy bills?
While inflation has slowed since its peak in 2022, prices are still rising and the energy price cap is still higher than it was before the coronavirus pandemic.
With the finances of many families stretched to their limits by the cost of living, some may have struggled to build an emergency fund to help them weather financial shocks.
If you’re able to, cutting down on your energy use could help you to save some money on your bills. But it’s possible that cutting down isn’t an option. If you’re finding it difficult to pay your energy bills then you should ask for help as soon as possible.
You can contact your energy supplier to say you are struggling to afford your bills, and you may be able to arrange a new payment plan. If you can’t come to an agreement and you pay for your energy by direct debit, your supplier may want to switch you to a prepayment tariff.
Some energy suppliers offer grants and hardship funds, as well as advice, so it’s worth seeing if you are eligible for any support from your provider.
While closed at the moment, there are government schemes available that support those in need throughout the winter, including:
- Warm Home Discount
- Winter Fuel Payment
- Cold Weather Payment
There may be some local grants available too, so check with your local council to see if it can offer any support.
» MORE: Help if you can’t afford your energy bills
If you are struggling with your finances and debts, you can also contact charities for help and advice, such as:
» MORE: How debt charities can help
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by Rhiannon Philps