Ofgem will raise the energy price cap by 13% from 1 April 2025, pushing the typical dual-fuel bill to £1,928 a year, £180 more than the current £1,748. The increase, driven by higher wholesale gas costs and network charges, lands just as households face council tax and water bill rises too.
The announcement, as reported by MSN, marks the second consecutive quarterly rise and the highest cap level since January 2024. For the 28 million households on standard variable tariffs, the maths is brutal: every kWh of electricity now costs about 27p, gas about 7p.
Who qualifies, and who doesn’t
The cap applies to default tariff customers in England, Wales, and Scotland. Northern Ireland has a separate price guarantee. Prepayment meter customers pay slightly less, around £1,928 versus £1,965 on direct debit, but the gap has narrowed. About 4 million households on fixed deals are shielded until their contract ends; then they fall onto the capped rate.
What this misses: the cap is not a ceiling on total bills. It limits unit rates and standing charges. A household using 14,000 kWh of gas and 3,000 kWh of electricity, typical for a draughty 3-bed semi, will pay more than the ‘typical’ figure. Ofgem’s own data shows the top 10% of users pay over £3,500.
What it costs a typical 3-bed semi
Take a 3-bed semi in Manchester with gas heating and uninsulated cavity walls. At the new rates, annual heating and power costs land at roughly £2,100. Add standing charges of about £330, and the total reaches £2,430. That’s £400 more than two years ago.
But the real story is the payback maths. A cavity wall fill costing £1,200 saves around £450 a year at current prices, a 2.7-year payback. Loft insulation top-up at £400 saves £200, two years. Even double glazing, typically £4,500 for a semi, now pays back in 8–9 years versus 12 years when gas was 4p/kWh. Energy Saving Trust figures confirm these ranges.
Heat pumps vs gas, the ratio shift
The cap keeps the electricity-to-gas price ratio at roughly 3.8:1, meaning electricity costs nearly four times gas per kWh. That’s a problem for heat pump economics. At a coefficient of performance (COP) of 3, a heat pump’s running cost equals gas. Above 3, it beats gas. Below, it loses. Most UK heat pumps achieve COP 3.2–3.8 in well-insulated homes, so the competition is tight.
Yet the gap is narrowing. In 2022 the ratio hit 4.5:1. If wholesale gas stays high and Ofgem shifts more network costs onto gas, as some analysts predict, the ratio could fall below 3:1 by 2026. That would make heat pumps cheaper to run than gas boilers for the first time in a decade.
What you should do by June 2025
First, fix your tariff if you’re on the cap. Some suppliers offer 12-month fixes at 8–10% below the April cap rate. Compare via Ofgem-accredited sites. Second, book an EPC assessment, you can’t claim GB Insulation Scheme grants or Boiler Upgrade Scheme payments without one. Third, prioritise insulation before generation. A heat pump on a leaky house costs more to run than a gas boiler on a tight one. Loft and cavity wall work first, then consider solar PV (payback now ~7 years at 27p/kWh export).
The GB Insulation Scheme opens for applications on 1 April. Households with EPC D or below can get free or subsidised loft and cavity wall insulation. Check eligibility at gov.uk. The Boiler Upgrade Scheme still offers £7,500 off a heat pump, but only if your home has at least 150mm loft insulation and cavity wall fill.
Households on prepayment meters should switch to direct debit if possible, the standing charge difference alone saves £35 a year. And anyone struggling should contact their supplier for a payment plan or the Warm Home Discount (automatic for most on Pension Credit).
Frequently Asked Questions
Yes. Higher electricity unit rates (27p/kWh under the new cap) increase the value of self-consumed solar power. A typical 4kW system generating 3,500 kWh/year saves roughly £945 at current rates, up from £700 when electricity was 20p. Export payments at the Smart Export Guarantee rate (typically 15p/kWh) add another £200–£300. Payback falls from 10 to roughly 7 years.
Yes. The GB Insulation Scheme provides free or subsidised loft and cavity wall insulation for households with EPC D or below. Eligibility depends on income or receipt of means-tested benefits. The scheme runs until March 2027. Separately, the Great British Insulation Scheme (formerly ECO+) offers support to low-income households and those in lower council tax bands. Apply through your energy supplier.
