April energy price cap predicted to increase by 3%

Energy bills for households on standard variable tariffs are expected to rise again in April 2025, with energy consultant Cornwall Insight predicting a 3% increase in the Default Tariff Cap.

The April cap is forecast to reach £1,785 annually for a typical dual-fuel household, up from January’s cap of £1,738.

The forecast comes amid renewed volatility in wholesale energy markets, driven by geopolitical tensions and higher withdrawals from European gas storage facilities.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “The news of a rise in our forecast will be disappointing to households who will no doubt have been hoping for relief from recent cap rises. However, the turbulence in wholesale markets… reminds us to remain cautious of predictions, which could very well increase or decrease several times before the April cap is set.”

The energy market outlook is further complicated by Ofgem’s ongoing reviews, which could add or reduce costs for consumers. A likely extension of the Supplier Bad Debt Allowance, introduced to support prepayment customers, could add around £30 annually to bills. On the other hand, Ofgem is considering reforms that might decrease bills by £10 or more.

Meanwhile, uncertainty remains around the impact of the Energy-Intensive Industry (EII) network charge exemption scheme, which could affect overall pricing dynamics.

Elise Melville, an energy expert at Uswitch.com, noted that consumers face continued unpredictability. “The sudden change from a 1% to 3% increase in the April price cap prediction suggests that energy prices will remain uncertain into next year,” she said.

Ms Melville also highlighted the potential for households to save by switching to fixed-rate energy deals. “Right now, there are a range of fixed deals available which offer significant savings versus the January price cap. The average household could save up to £148 per year by switching to a 12-month fixed deal,” she said.

For those worried about rising bills, Ms Melville encouraged reaching out to energy suppliers for support.

While Cornwall Insight expects July’s price cap to drop slightly from April’s levels, October is predicted to bring further increases.

With wholesale market turbulence likely to persist and Ofgem’s policy changes still in flux, energy pricing for 2025 remains highly uncertain.

Dr Lowrey concluded: “Ultimately, the security of energy supply, and Ofgem’s evolving policies will shape the trajectory of bills as we move into 2025 and beyond. It’s crucial for policymakers and industry stakeholders to work together to ensure fair and sustainable energy pricing for households.”