Headlines
Millions of Britons face higher energy bills as price cap rises 6.4%
Published by Global Banking & Finance Review®
Posted on February 25, 2025
2 min readLast updated: January 25, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on February 25, 2025
2 min readLast updated: January 25, 2026
Ofgem raises UK energy price cap by 6.4% due to soaring wholesale prices, affecting millions. Government seeks to cut fossil fuel reliance.
By Susanna Twidale
LONDON (Reuters) - Millions of Britons will pay higher energy costs from April after regulator Ofgem said its domestic price cap would rise 6.4% due to soaring wholesale energy prices.
The rise is the third consecutive quarterly increase and a blow for the government, which has made reducing energy bills one of its aims. It comes after higher-than-expected inflation figures for January.
Ofgem's new cap of 1,849 pounds ($2,334.18) a year for average use of electricity and gas is up 111 pounds, or 6.4%, from 1,738 pounds under the previous cap.
Benchmark British gas prices hit a two-year high earlier in February as cold temperatures led to high withdrawals from Britain and Europe’s gas stores and after a deal to supply Russia gas via Ukraine expired at the end of the year.
Wholesale gas and power prices are a major part of the formula Ofgem uses to calculate the price cap.
Britain's energy minister Ed Miliband said the government is working to cut the country's reliance on expensive fossil fuels and is providing support through the Warm Home Discount which offers some people on benefits 150 pounds towards their energy bills each winter.
“Alongside this, the way to deliver energy security and bring down bills for good is to deliver our mission to make Britain a clean energy superpower- with homegrown clean power that we in Britain control," he said.
Britain has a target to decarbonise its electricity sector by 2030 and cut its use of gas which currently provides around a third of its power.
Campaign groups called on the government to offer more support for vulnerable households, such as launching a social tariff or a help-to-repay scheme for customers in debt.
Based on current wholesale energy prices, the cap could fall in July to 1,756 pounds a year, analysts at Cornwall Insights forecast, but they warned that volatile markets mean the forecast is likely to change multiple times before the next cap level is set.
($1 = 0.7921 pounds)
(Reporting by Susanna Twidale, additional reporting by Shashwat Awasthi; Editing by Eileen Soreng)
Ofgem's new cap is set at 1,849 pounds per year for average use of electricity and gas, which is an increase of 111 pounds or 6.4% from the previous cap.
Energy bills are rising due to soaring wholesale energy prices, which have been influenced by cold temperatures and high withdrawals from gas stores.
The UK government is working to reduce reliance on expensive fossil fuels and is providing support through initiatives like the Warm Home Discount for vulnerable households.
Analysts at Cornwall Insights forecast that the price cap could fall to 1,756 pounds a year in July, but they caution that market volatility may affect this prediction.
Campaign groups are calling on the government to provide more support for vulnerable households, including the introduction of a social tariff or help-to-repay schemes for customers in debt.
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