Ofgem announced on 22 November 2024 that the energy price cap for the period 1 January to 31 March 2025 will be £1,738 a year for a typical household using electricity and gas and paying by Direct Debit1. The regulator said the price for a typical household will go up by 1.2%1. The cap level for the current period, 1 October to 31 December 2024, is £1,7172.
The cap applies to standard credit, Direct Debit, prepayment meter and Economy 7 customers1. The level differs by payment method, and the figures below are for a typical dual fuel household2.
| Payment method | 1 Oct to 31 Dec 2024 | 1 Jan to 31 Mar 2025 | Change |
|---|---|---|---|
| Direct Debit | £1,717 | £1,738 | £21 (1.2%) |
| Standard credit | £1,829 | £1,851 | £22 (1.2%) |
| Prepayment meter | £1,669 | £1,690 | £21 (1.3%) |
| Economy 7 (Direct Debit) | £1,131 | £1,150 | £19 (1.7%) |
Ofgem said the increase is because wholesale prices remain high due to global factors1. Its summary of changes gives the wholesale cost allowance rising by £19, from £736 to £755, and states that wholesale prices have remained elevated in anticipation of the end of the Russia-Ukraine transit agreement and a possible increase in Europe's dependence on the global LNG market, with cooler weather forecast for this winter increasing gas demand2. Other costs indexed to the cap level, including headroom, EBIT and VAT, add £2, and standing charges will remain broadly the same from 1 January 20252. Ofgem also said the new level is 10% (£190) per year lower than the cap set for 1 January to 31 March 2024, which was £1,9281.
For Direct Debit customers on a standard variable tariff, Ofgem gives average unit rates of 24.86 pence per kilowatt hour for electricity with a daily standing charge of 60.97 pence, and 6.34 pence per kilowatt hour for gas with a daily standing charge of 31.65 pence, averaged across England, Scotland and Wales and including VAT1. Ofgem states that the actual amount paid depends on how much energy a household uses, where it lives and the type of meter it has1. The cap does not apply in Northern Ireland, where separate arrangements operate.
"From 1 January to 31 March 2025 the price for energy for a typical household who use electricity and gas and pay by Direct Debit will go up by 1.2% to £1,738 per year."
National Energy Action said the January price will be £1,738 a year for a typical household, an increase of £21 or 1% from the current level3. Its chief executive, Adam Scorer, said bills are around 50% higher than pre-crisis levels and that there are currently 6 million UK households in fuel poverty3. The British Gas Energy Trust said the increase means a typical annual bill will rise to £1,738, a sum it said 9 million fuel poor households across England will struggle to afford4. It reported that in 2023-24 it supported over 5,300 households with more than £7.8m in energy debt grants, and that its Individuals and Families Fund provides up to £1,700 in energy debt grants to British Gas and non-British Gas customers, while its Energy Support Fund offers grants up to £2,000 to British Gas customers only4.
Why it matters for households
The cap limits what a supplier can charge per unit of energy and for the daily standing charge on a default tariff, not the total bill, so a household's costs still follow its consumption, its region and its meter type1. The gap between payment methods is set out in the cap levels: standard credit is the most expensive option, and Ofgem's figures put it £113 a year above Direct Debit for a typical dual fuel household, while prepayment is £48 below Direct Debit2. For a household on Economy 7, the Direct Debit level rises by £19 to £1,1502.
Because the increase is driven mainly by wholesale costs, the unit rate a household pays reflects conditions in international gas markets rather than anything in the home2. That is the part of a bill a household cannot control through its own choices; what it can affect is how many units it uses and which payment method it is on. The cap level is also 10% lower than the same period a year earlier, so the direction of travel is not one way1.
What happens next
Ofgem reviews and sets the cap every three months, and said the levels for 1 April to 30 June 2025 will be published by 25 February 20251. National Energy Action's Fuel Poverty Awareness Day took place on Wednesday 27 November 20243.
Sources4 cited
- Changes to energy price cap between 1 January and 31 March 2025 | Ofgem, ofgem.gov.uk
- Summary of Changes to Energy Price Cap 1 January to 31 March 2025, ofgem.gov.uk
- National Energy Action responds to energy price cap announcement: ‘Now we know there will be no let up into January and beyond’ - National Energy Action (NEA), nea.org.uk
- Energy debt support from the British Gas Energy Trust - British Gas Energy Trust, britishgasenergytrust.org.uk