Energy bills set to rise by £111 from April

Energy prices are set to rise again in April, adding further pressure to household budgets.

Under regulator Ofgem’s new cap, energy bills will increase by 6.4%, meaning a typical household will pay an extra £111 annually or £9.25 per month, bringing the total to £1,849 per year.

Why are energy prices rising again?

This latest price hike marks the third consecutive increase in the quarterly energy price cap.

Rising wholesale energy costs are the main reason prices are increasing, but Ofgem has also pointed to inflation as a contributing factor. Analysts had expected a 5% increase, but the final figure was higher than anticipated.

In addition to rising unit prices, standing charges—the fixed fees customers pay to connect to the energy grid—are also increasing, with some households facing an extra £20 per year. These charges vary depending on your location.

The impact on households

For many, this increase adds to an already challenging financial situation. Bills remain about 50% higher than pre-pandemic levels and are only slightly below the peak reached in 2022 when energy prices soared following Russia’s invasion of Ukraine.

At Money Wellness, we’re seeing firsthand how these rising costs are affecting households:

• 1 in 3 people we help are in debt to their energy provider.
• 2 in 3 are behind on at least one of their priority household bills.
• The average one-adult household we support spends 17% of their income on energy bills.
• Household utility spending has risen 6.4% year-on-year, and the total amount owed by those seeking debt support has surged by 21.1% to £12,575.

Consider fixed deals

With prices continuing to rise, Ofgem’s chief executive, Jonathan Brearley, has advised households to consider fixing their energy tariff where possible. Fixed-rate tariffs provide price certainty over a set period, which can help with budgeting. If you’re worried about your bills, reaching out to your supplier is crucial, as they may be able to offer support.

Who is Ofgem?

Ofgem (Office of Gas and Electricity Markets) is the UK’s energy regulator. Its role is to protect consumers, ensure fair competition in the energy market, and set the energy price cap to prevent excessive charges by suppliers.

What is the energy price cap?

The energy price cap limits the maximum amount suppliers can charge per unit of gas and electricity. However, it does not cap the total bill—your final cost depends on how much energy you use.

Who is on the Ofgem energy price cap?

The price cap applies to households on standard variable tariffs, which are the default tariffs for customers who haven’t switched to a fixed-rate deal. It affects around 26 million homes in England, Scotland, and Wales.

How is the price cap calculated?

Ofgem reviews and updates the price cap every three months based on several factors, including:

• Wholesale energy costs
• Network maintenance costs
• Supplier operating expenses
• Government policies and environmental obligations
• Inflation

What help is available if you’re struggling with energy costs?

If you’re finding it difficult to pay your energy bills, help is available:

• Contact your energy supplier: They might offer payment plans or grants.
• Government help: Support such as the warm home discount, winter fuel payment, and cold weather payment may help eligible households.
• Household support scheme: Speak to your local council, they might be able to give you money or vouchers to help with energy costs
• Free debt support: We can support you with managing energy debt. Get in touch if you’re struggling.