What Does the 2025 Energy Price Cap Increase Mean to Me?

How much is the energy price cap changing?

The UK energy regulator, Ofgem, has announced that the energy price cap will increase by 1.2% from 1 January 2025, raising the cap for a typical dual-fuel household paying by direct debit from £1,717 to £1,738 per year.

What is the energy price cap?

The price cap sets a maximum limit on the rates that energy suppliers can charge consumers on standard variable tariffs for each unit of electricity and gas, as well as the daily standing charges. It's important to note that the cap does not limit the total bill amount; actual costs will vary based on individual energy consumption.

When does this come into effect?

The price cap rises from the 1st January 2025 and the adjustment follows a 10% increase that was implemented on 1st October 2024.

Why is this happening?

The recent increase is attributed to sustained high wholesale energy prices, influenced by global factors such as geopolitical tensions and supply disruptions.

What can we do about it?

Consumers are encouraged to review their current energy deals and explore alternative self-sufficient options that give them partial or full control over their energy bills. Additionally, improving energy efficiency at home can help mitigate the impact of rising energy costs.

Review your current energy deal to understand what tariffs are on and how you are impacted by external factors such as geo-politics. A fixed-rate tariff will likely provide standard rates but does not provide flexibility should the price of energy go down, as it is likely to do with electrification.