The energy price cap will rise by £196 a year from July – the second increase in six months. Ofgem confirmed the figure on 25 February, pushing a typical dual-fuel bill to £1,762. That is £16.33 extra each month for a 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity.
As reported by Birmingham Live, the rise is less than the £300 some analysts had warned about. But the direction is clear: energy costs are climbing, and government subsidies are not keeping pace.
Who qualifies – and who doesn’t
The price cap applies to households on standard variable tariffs – 85% of UK homes. Those on fixed deals are shielded until their contract ends. But the cap does not cover standing charges, which will rise 8% to about £334 a year for a typical dual-fuel customer. That means even low-energy users pay more before they switch on a light.
Ofgem figures show the average household will spend £1,762 on gas and electricity from July. That is £159 more than the current cap of £1,603. The increase is driven by higher wholesale gas prices, which have risen 22% since December, and increased network costs.
What it costs a typical 3-bed semi
Take a semi-detached house in Manchester with gas central heating and standard double glazing. Annual bill: £1,762. Monthly: £146.83. That is £16.33 more than today. Over a year, that extra £196 could buy a new boiler service – or pay for a quarter of a loft insulation job.
The Energy Saving Trust calculates that loft insulation (cost £300-£500 for a typical 3-bed semi) can save up to £300 a year on heating. Payback time: under two years. Cavity wall insulation (£400-£700) saves up to £250 a year. Both reduce the impact of the cap rise immediately.
Yet the catch is that many homes in the UK – around 4.5 million – still have no loft insulation or less than 60mm. The Great British Insulation Scheme, launched in 2023, has reached only 60,000 homes by January 2025, far short of its 300,000 target. Officials have not confirmed when applications reopen.
Solar and heat pumps – the longer game
Solar panels (cost £5,000-£8,000 installed) can cut electricity bills by £300-£500 a year, depending on orientation and location. That offsets the entire cap rise and more. The Smart Export Guarantee pays 5-15p per kWh exported, adding another £100-£200 annually. Payback time: 10-15 years.
Heat pumps (cost £7,000-£13,000 after the £7,500 Boiler Upgrade Scheme grant) can cut heating bills by 20-30% compared to gas boilers, saving £200-£400 a year. They also reduce carbon emissions by 60-80%. But installation requires good insulation first – a point the government’s heat pump strategy has been criticised for skimming over.
Households on standard variable tariffs can apply for the Boiler Upgrade Scheme through gov.uk from 1 April 2025. Eligibility closes on 31 March 2027. The cap rise adds urgency: every month of delay costs £16.33 in higher bills.
Frequently Asked Questions
The energy price cap will rise by £196 a year from July 2025, bringing a typical dual-fuel bill to £1,762. That's £16.33 more per month for a 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity, with standing charges also rising 8% to about £334 a year.
Loft insulation (£300-£500 for a 3-bed semi) saves up to £300 a year, paying back in under two years and immediately offsetting the £196 cap rise. Cavity wall insulation (£400-£700) saves up to £250 a year. Solar panels (£5,000-£8,000) cut electricity bills by £300-£500 annually, while heat pumps (£7,000-£13,000 after the £7,500 Boiler Upgrade Scheme grant) save £200-£400 a year on heating.
The Great British Insulation Scheme has reached only 60,000 homes by January 2025, far short of its 300,000 target, and officials have not confirmed when applications reopen. This leaves around 4.5 million UK homes with no loft insulation or less than 60mm without current government support for basic insulation upgrades.
The Boiler Upgrade Scheme offers a £7,500 grant for heat pump installation, reducing the cost to £7,000-£13,000 for a typical 3-bed semi. Households on standard variable tariffs can apply through gov.uk from 1 April 2025, with eligibility closing on 31 March 2027. Heat pumps can cut heating bills by 20-30% compared to gas boilers, saving £200-£400 a year.
No, the price cap only applies to households on standard variable tariffs, which covers 85% of UK homes. Those on fixed deals are shielded until their contract ends, but once it expires, they'll move to the capped rate. The cap doesn't cover standing charges, so even low-energy users pay 8% more (£334 a year) before using any energy.
