Energy cost rise: higher bills amid market uncertainty

Millions of households across the UK are facing an increase in energy bills today as the government’s energy price cap rises by 6.4%. The latest adjustment, announced by the energy regulator Ofgem, will see the average annual household energy bill jump from £1,738 to £1,849, an increase of £111 per year.

Regional disparities in Energy price hikes

The impact of this rise will not be felt evenly across the country, with some regions facing steeper increases than others. The hardest-hit areas include North Wales and Mersey, where households will see their annual energy costs surge by 9.06%, which is an additional £161.82 per year. In contrast, London and the South East will experience relatively smaller increases of around 4.3%.

The new cap applies to approximately 22 million households on standard variable tariffs. Fixed-rate tariff customers will not be immediately affected, but they could see higher prices once their contracts end if wholesale energy prices remain elevated.

The factors behind the price rise

Ofgem attributes the increase to rising wholesale energy costs, driven by global market conditions and supply constraints. While wholesale prices have stabilised somewhat from their record highs during the energy crisis of 2022-23, they remain significantly above pre-pandemic levels.

Energy industry analysts point to additional factors, including:

• continued volatility in gas markets, exacerbated by geopolitical tensions and supply disruptions;
• increased investment in renewable energy infrastructure, which, while necessary for long-term sustainability, has led to short-term cost burdens being passed on to consumers;
• inflationary pressures across the broader economy, driving up operational costs for energy suppliers.

The ‘Awful April’ for household bills

This energy price hike is one of several cost increases hitting UK households this month. Council tax, water bills, car tax, and TV licence are also rising, leading consumer advocacy groups to label April 2025 as an “awful April” for household finances.

Water bills are set to rise by an average of 6%, adding approximately £27 to the typical household’s annual cost, while council tax hikes could add up to £100 per year for some residents. Meanwhile, car tax increases will affect millions of motorists, with rates rising in line with inflation.

Calls for Government action

Consumer rights groups and opposition parties have called on the government to introduce measures to alleviate the financial burden on households.

“The cost of living crisis is far from over,” said Martin Lewis, founder of MoneySavingExpert.com. “Millions of households are still struggling to recover from the financial shocks of recent years, and this latest round of price hikes will push many closer to the brink.”

Some policymakers are advocating for a government-backed energy social tariff, which would offer discounted rates for low-income and vulnerable households. While the idea has received support from campaigners, the government has yet to confirm any plans for its introduction.

What consumers can do

In response to the price rise, energy experts recommend that consumers:

• check if they are eligible for government support, such as the Warm Home Discount Scheme or the Energy Price Guarantee;
• review their energy tariffs to see if a fixed-rate deal could offer savings in the long run;
• improve energy efficiency at home, such as using smart thermostats, switching to energy-saving appliances, and insulating homes to reduce consumption;
• monitor energy usage through smart meters to identify areas where consumption can be reduced.

Looking Ahead

Ofgem will review the energy price cap again in July 2025, with the potential for further adjustments depending on market conditions. Some analysts believe prices could stabilise or even decrease if wholesale energy costs fall, while others warn that ongoing geopolitical instability could lead to continued volatility.

For now, UK households are bracing for yet another financial strain as the rising cost of essential utilities continues to squeeze budgets nationwide.