The energy price cap in Great Britain is set to increase by 6.4% from April, raising the typical annual household bill to £1,849. This marks the third consecutive quarterly rise, driven largely by soaring wholesale prices that have pushed up the cost of energy. The cap's adjustment, although expected to dip slightly during the summer, will likely rise again in October as colder weather leads to higher energy consumption.
Cornwall Insight, a consultancy firm, predicted an £85 increase in the cap, translating to a 5% hike from April, setting it at £1,823. This adjustment means that households will now pay roughly £600 more annually for gas and electricity compared to three years ago before Russia's invasion of Ukraine. As a result, approximately 9 million homes on variable tariffs will experience an immediate impact on their energy bills when the cap takes effect in April.
About 11 million consumers on fixed deals will remain unaffected by this change. The price cap, which limits the rate energy suppliers can charge per unit of gas and electricity—not the total bill—poses significant challenges amidst government pledges to reduce bills by up to £300 by 2030. This latest increase contradicts the government's electoral promise and has raised concerns among campaigners and charities.
Peter Smith, policy director at the National Energy Action (NEA), emphasized the severe impact on those struggling with energy costs:
“The thought of a third successive and significant price cap rise will be unbearable for many of the people we try and help. This winter has been brutal, people’s bills are already totally unaffordable, many have had less access to support and are already in unmanageable amounts of energy debt,” – Peter Smith, policy director at the fuel poverty charity National Energy Action (NEA).
Jonathan Brearley, Ofgem's chief executive, acknowledged the difficulties faced by consumers:
“We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households.” – Jonathan Brearley, Ofgem chief executive.
The increase in the price cap is seen as a significant setback for those who have endured a harsh winter with unaffordable bills. While the adjustment takes effect in a season where temperatures rise, Smith points out this offers "cold comfort" for many who have already struggled financially during the colder months.