Annie
26th Feb 2025
Reading Time: 3 minutes
Ofgem announced on Tuesday (25th Feb) that the energy price cap will rise on 1st April. It’s going up by 6.4%, which means the average household will pay £111 more over the year with an average bill of £1849.
We’ve now seen three price cap increases in a row – which means energy costs have gone up three times in the past nine months. It’s a much higher increase this time than many expected, and there are concerns about how this might hit many households hard.
The Rise is Variable
The energy price cap doesn’t necessarily mean your specific bill will rise by 6.4% in April. Instead, it’s the average of UK households. Your usage also reflects the variables between standing charge increases and energy unit usage. The average standing charge is going down by 11%, but the cost of electricity rising by 9%. If you’re a low user, the decrease in standing charge will have a bigger mitigating impact on the rise of electricity cost. For those with a gas supply, it is worth noting that the unit rate is going up by an average 10% AND the standing charge will rise by 3.2%.
There will also be regional variations and differences depending on the type of energy used (dual or single fuel). It can also depend on how you pay your bill: Direct Debits usually lower your standing charge or provide a small discount each month, which is one further reason the price cap increase has angered many. Direct Debits are not available to vulnerable customer groups, such as older people who prefer to pay by cheque or on receipt of a bill because they don’t have online banking access. They are also not suitable for very low income households because the Direct Debit can be changed at any time by the provider – meaning large unanticipated amounts could be taken from bank accounts with little or no notice if the provider thinks you should increase your monthly payment.
Fix Now
The price cap doesn’t come in until 1st April 2025 – so you still have time to fix your tariff. Most of the cheap tariffs have recently left the market, but unless you’re already on a fixed tariff with an exit fee, it’s worth comparing available rates and switching to the cheapest. Staying on a variable tariff means your bill will go up and down according to market rates (and energy price cap rises), but the future is uncertain when it comes to energy. A fixed tariff guarantees the price for the period of the term it is fixed for. This’ll also help you budget for your bills.
Switch to a Smart Meter
Smart meters can help you monitor your energy usage in real time, which means you’re able to assess where and when you use the most energy and whether you could cut back. For example, if you know your washing machine uses more energy during the day, consider setting the timer to run it at night during the off peak tariff for a cheaper wash (if your neighbours won’t be disturbed by it!).
Those on old telemetry meters will often be on Eco 10 or Eco 7 tariffs. This can be confusing becaues there are four (not two) day/night rates. Many suppliers won’t even cater to these setups anymore. The long wave radio that telemetry meters use to know what time it is (and therefore which tariff) is switched off this June. So, you’ll need to switch to a smart meter soon – and the good news is that it opens up a whole new world of tariff opportunity. If you’ve been stuck on an Eco 7 or Eco 10 dual-meter (four rate) tariff with a supplier you’re unhappy with, now’s the time to get your meter switched then change supplier for a new fixed smart meter tariff!
Take a Reading on 31st March
Regardless of your meter type and tariff, make sure you take a record of your meter reading on 31st March. This will help you ensure your bill is as accurate as possible once the price cap rise comes in the following day.