Ofgem’s price cap will jump again by 6.4% in April although the exact amount you pay depends on how much gas and electricity you use
Energy bills will rise again in April in what will be the third increase in recent months as households struggling with the cost of living are hit in the pocket once more.
Energy regulator Ofgem’s price cap will jump by 6.4% from April 1 – more than was feared and increasing a typical annual bill by £111 to £1,849.
It marks the third increase in energy bills in recent months, after the price cap went up by 10% in October, followed by another 1.2% rise in January. The latest price cap rise is also higher than the £85 increase that had previously been expected by industry experts Cornwall Insight.
Around 22 million customers will be affected, including four million on prepayment meters. The exact amount you will pay depends on how much gas and electricity you use. This is because the price cap does not limit households’ total bill, instead, it sets the maximum that can be charged for unit rates of gas and electricity, as well as the standing charges.
The headline figures for cost rises represent what the average billpayer can expect to pay, based on how much energy Ofgem estimates that the average household uses.
Those worrying about the increases should keep in mind that Ofgem’s cap could also fall later this year. Wholesale gas prices have come down in recent weeks and could drop further if there is, for example, a peace deal in Russia’s war on Ukraine.
And there are plenty of fixed rate deals available that are cheaper than the price cap. Some offer savings of up to £179 per year versus the April cap. Bear in mind it is the unit rates of energy that are fixed, not the overall bill.
Richard Neudegg, director of regulation at Uswitch.com, has urged households to shop around now for a better energy deal. Around 11 million households are currently locked into a fixed energy deal. He said: “If you are still riding the rising rates, now is the time to find a better deal. There are plenty of fixed deals available that are cheaper than today’s rates, let alone the higher April prices. A fixed deal could protect you from further price increases for 12 months or longer.”
If you’re on a “variable” or “default” tariff it’s very likely you can save by switching to a fixed deal or tracker tariff. If you’re on a fixed tariff with more than 49 days left on your contract: you’ll probably have to pay an exit fee to leave your contract early. You can switch but it might be worth staying put for now.
If you’re on a fixed tariff with less than 49 days left on your contract you can switch now without paying exit fees. You should look at getting a new fixed deal to avoid being rolled onto an expensive standard variable tariff, Uswitch says.
Jonathan Brearley, CEO of Ofgem, said: “We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households. But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.”
Ofgem updates its price cap every three months, so the new rates will remain in place until June 30, when it will then be revised again.
Ofgem has blamed the increase on a spike in wholesale prices, along with an increase in policy costs and inflationary pressures. It says prices are 9.4% higher than this time last year, but remain 22% lower than at the height of the energy crisis at the start of 2023.
