London Daily

Focus on the big picture.
Sunday, Jun 01, 2025

Why are bills still rising if the energy price cap is falling? Here's everything you need to know

Why are bills still rising if the energy price cap is falling? Here's everything you need to know

The only thing certain in the world of energy bills at the moment is that they are going up. Here we explain why, how, and what you can do.
The energy price cap has dominated the news in recent months, and while today brings some good news - that the amount suppliers can charge is expected to fall - bills still look set to rise.

Today, Ofgem announced it was lowering the price cap - the amount suppliers are able to charge - from the current £4,279 per year to £3,280 for the average household, effective from 1 April, a reduction of 23%.

The regulator said the reduction of almost £1,000 reflects recent falls in wholesale energy prices.

What is the price cap?

The price cap sets a limit on the amount suppliers can charge for each unit of gas and electricity used. It also sets a maximum daily standing charge (what you pay for your home to be connected to the grid).

The overall figure is not a limit on what your total bill can be - it only reflects "typical" usage. So if you use more energy, you will pay more. If you use less, you'll pay less.

What is more important to look at is the percentage rise or fall - this time it's a reduction of around 23%.

The price cap affects customers in England, Scotland, and Wales. In Northern Ireland, suppliers can adjust prices when they want, as long as it is approved by the Utility Regulator. It is now being reviewed quarterly.
Advertisement

So why are my bills still going up?

Despite the decrease in the price cap, domestic energy bills are still expected to rise by an average of £500 a year as the government's support for households becomes more limited.

The £3,280 figure indicates how much consumers on their energy suppliers' basic tariff would pay if the government's Energy Price Guarantee (EPG) was not in place.

But customers will pay about 20% more on their bills - approximately £500 - as the government's EPG becomes less generous from the beginning of April, leading to an average bill of £3,000.

When the upcoming end of the £400 energy rebate scheme - paid in six instalments of £66 and £67 a month - is factored in, the energy cost for households will increase even more.

Who is impacted by the price cap?

The price cap applies to default tariffs, also known as standard variable tariffs or SVTs.

You will be on one of these tariffs if your fixed tariff ended, and you did not sign up for a new one, if you've never switched your energy tariff, if you were with a supplier that went bust, and if you have recently moved home (although some suppliers allow you to transfer fixed deals, so check).

If you are on a fixed tariff, you are not affected by the price cap. There is also a separate price cap for households on prepayment meters, and this is reviewed quarterly.

Ofgem estimates that 22 million households are on a variable tariff, but this will increase as more people come off fixed tariffs and realise that finding another one is not so easy (more on that later).

Is the price cap a good thing?

Some are starting to wonder if the price cap has had its day.

Among them is Dr Craig Lowrey, principal consultant at Cornwall Insight, an energy consultancy with a good track record of forecasting the price cap.

Earlier in August, Dr Lowrey said that "it may be time to consider the cap's place altogether".

He added: "After all, if it is not controlling consumer prices, and is damaging suppliers' business models, we must wonder if it is fit for purpose - especially in these times of unprecedented energy market conditions."

Will I pay less if I just don't send a meter reading?

If you don't send a meter reading, the supplier will bill you based on how much energy it thinks you have used - an estimate.

Yes, this could be less than what you have actually used, but eventually, the supplier will send someone out to get a reading, and you will have to pay the difference anyway.

Of course, the estimates could also be more than you actually use - so you will be overpaying.

With this in mind, it is always best to send regular meter readings.

What if I fix my tariff?

Fixing your tariff will give you certainty - you'll know the price you will be charged for each unit and the standing charge for the length of your contract. You won't be affected by the price cap during this time.

In recent years, consumers have always been better off on a fixed tariff, but that has changed - there are no tariffs meaningfully cheaper than the current price cap.

What you could try to do is find a fixed tariff that is cheaper than the forecasts for future price caps. Remember this means that you're looking about a year ahead.

Most of the best fixed tariffs will only be offered by suppliers to current customers, so it is always worth checking to see what your supplier has available. Just don't get your hopes up.

I'm struggling to pay my bills. What can I do?

Citizens Advice chief executive Dame Clare Moriarty said the increase will "spell catastrophe" for millions of households without further support from the government.

If you can't pay your energy bills - or any other type of household bill, for that matter - don't ignore it.

Your first step should be to contact your supplier - the earlier, the better. They must offer you a payment plan you can afford, according to regulator Ofgem's website.

You could also talk to a debt management charity such as StepChange, or contact Citizens Advice.
Newsletter

Related Articles

0:00
0:00
Close
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
×