Ofgem, the energy regulator for Great Britain, has just declared a new epoch with profound changes to their famous energy price cap. Together, these changes will affect an estimated 22 million residential households across England, Wales and Scotland. From April 2025, the annual cost for the average household is expected to increase to £1,849. Ofgem sets the energy price cap based on projected energy prices and has committed to reviewing this every three months. That’s because this increase is a direct outcome of their analysis of energy usage patterns.
The energy price cap is based on an outdated and too simplistic “typical household” metric. This typical household uses 11,500 kWh of gas and 2,700 kWh of electricity annually. These households are in one monthly payment plan, paying one bill for both gas and electricity automatically withdrawn from their bank account with a direct debit. Ofgem has adjusted its approach to in turn address the continually changing energy landscape. These reforms are needed to make sure consumers aren’t paying more than they should.
Households that pay by direct debit will be hit hardest with an average increase of £1,586. Furthermore, anyone paying quarterly by cash or cheque will face increased fees as well. Their annual bill has now been capped at £1,969, showing how payment methods can impact the costs of energy on the wallet. For households with prepayment meters, the impact has translated into them enjoying immediately cheaper costs. As of April 2025, their average bill is £1,803.
Ofgem has recently introduced new rules related to involuntary installation of prepayment meters, with the objective of safeguarding customers in vulnerable positions. Over four million households were on prepayment meters as of January 2025. These regulations strike at the very heart of Ofgem’s stated mission. They advocate for ensuring all consumers—especially those struggling to make ends meet—receive the help and guidance they deserve.
And the energy price cap only extends to households in Great Britain. Unfortunately, Northern Ireland has its own separate energy market and is not subject to any of these regulations. This difference has potential implications for energy pricing and the consumer experience throughout the UK.
Secondly, Ofgem regulates a price cap that is not really a price cap. It can be updated every three months to reflect the needs of the market. In their most recent announcement, the average electricity standing charge went from 60.97p to 53.8p. Meanwhile, the typical gas standing charge has jumped by almost 1p, from 31.65p to 32.67p. From April to June 2025, volumetric gas prices will be capped at 6.99p per kWh. Electricity prices will be capped at 27.03p per kWh over that period too.
During this transition period, the Household Support Fund is more important than ever as a tool to get help to vulnerable customers. That fund, launched in September 2021, has been an absolute godsend. It has recently been extended through March 2026, guaranteeing this vital lifeline to the people who need it most.
As the energy market continues to change, consumers are encouraged to continue reading to learn more about available options. If you’re looking to lock in low energy prices, take a stab at price-fixing with a variety of suppliers. Note that offers may vary based on current market conditions as well as your individual circumstances.
