UK Households will pay over £3,000 more for energy since winter 2020/21 as Ofgem rises price cap over 6%

 

HubMP2012

FEBRUARY 25, 2025

Ofgem has announced the energy price cap for April to June is now set to rise by 6.4% from current levels meaning an average annual bill of £1,849 for households paying by direct debit.

This means the average household is set to pay around £750 more per year for their energy compared to winter 2020/21 – a 77% increase. 

The Ofgem price cap means that energy firms should not charge more than the set rate for unit rates and daily standing charges for those on standard variable tariffs. The cost of every unit of gas used will surge by over 10%, meaning the cost of gas is now double what it was in winter 2020/21. 

Every unit of electricity will go up almost 9%. Around 40% of the time the cost of electricity is also driven by the price of gas due to the country’s energy system.

Also included in the small print is a clause that will allow energy suppliers to increase the profits made on every customer’s bill by 4.1%, compared to the current quarter. The wider energy industry has already made £483bn in profit over the course of the energy bills crisis.

Taking into account price changes and government support over time, the total extra cost that the average household has had to find for their energy will reach £3,039 by the end of June 2025.

Simon Francis, coordinator of the End Fuel Poverty Coalition, commented: “The soaring cost of gas is driving the current spike in energy bills and the only way out of the problem is to continue drives to improve our energy security and for the Chancellor to announce a £13.2bn, fully-funded, Warm Homes Plan in the Comprehensive Spending Review. But alongside the transition away from reliance on gas, it’s crucial to provide support for vulnerable households struggling with energy costs now.

“The big question will be how do we pay for these improvements in support. Both Warm Home Discounts and debt relief are traditionally funded through our energy bills. Yet the energy industry makes billions of pounds in profit every year and it beggars belief that Ofgem is increasing the profit allowance for suppliers in the current climate.”

Caroline Simpson, Warm This Winter campaign manager, commented: “Yet another price cap rise is devastating news. But bill payers need to know it is caused because global gas prices are soaring due to factors outside of our control and profiteering energy giants such as Centrica and Norwegian-owned Equinor, the biggest supplier of gas to the UK, who make billions of pounds each year out of our misery.

“It is therefore crucial that the government presses on with plans to fix this broken system and boost our energy security by rapidly increasing our supply of homegrown clean energy to free us from expensive gas and bring down bills for everyone for good.

“This must come alongside reform of electricity markets, investment in energy efficiency in our homes and financial support with the cost of energy for the most vulnerable households.”

James Watson-O’Neill, Chief Executive of the national disability charity Sense, said: “Yet another increase in the energy price cap – the third in a row – will dismay many disabled people.

“Disabled households are telling us they’re living in crisis. The need to power crucial equipment, such as feeding machines and hoists, means many disabled people have no choice but to use extra energy. Our research clearly shows that many disabled people with complex needs are already struggling to afford their energy bills, with more than two in five telling us they can’t afford to keep their home warm enough.

“There is no end in sight and disabled people cannot be left waiting any longer for targeted help with their energy bills. We need the government to urgently implement a social energy tariff, to help level the playing field for those who rely on energy-intensive equipment.”

Former Shadow Justice Secretary Richard Burgon MP tweeted: “The so-called energy regulator Ofgem says energy bills from April will rise by 6.4% The Government must step in and impose a real price cap and tax energy profits more to provide extra help to people. And to end this rip off, we must bring energy back into public ownership.”

Lambeth Labour councillor Martin Abrams pointed out: “In opposition Sir Keir Starmer promised to ‘freeze energy bills’. As Prime Minister he is allowing Big Energy Companies to increase bills by more than twice the rate of inflation.”

Excessive profits

Last week Centrica announced annual profits of more than £1.5bn. They come from across the company, including making £269m from households directly through its British Gas supplier arm and £307m from its market trading division which profits from trading in volatile oil and gas prices. This means that since 2020 Centrica has now posted almost £9bn in operating profits – the equivalent of £310 per household.

Warm This Winter spokesperson Caroline Simpson said: “We need to get away from energy bills driven by the gas industry which has netted just 20 profiteering companies like British Gas more than £483 billion since 2020. Our bills are high because of greedy gas and oil companies who are making billions which is why reducing energy use through better insulation and developing our own energy sources is the only way to achieve lower prices and energy security for good.”

On Thursday, Citizens Advice published a report about energy network companies making excessive profits from the cost-of-living crisis due a loophole in the Ofgem rules. Energy network owners made £3.9bn ‘excess profit’ from higher bills, the report says.

Cat Hobbs, Director of We Own It, said the findings were “outrageous”, tweeting: “Energy transmission and distribution is a natural monopoly and other countries recognise this – PUBLIC OWNERSHIP NOW.”

Labour peer Prem Sikka pointed out that “Ofgem’s marginal pricing rules guarantee profits to the most inefficient/costly producer,” adding that “one in five of all deaths are people in fuel poverty – including 110,000 pensioners. Yet [there are] no curbs on profiteering.”

Simon Francis, coordinator of the End Fuel Poverty Coalition, commented: “We have been warning Ofgem about the charges we pay to these firms and the profits they make for well over a year now. But these firms have a virtual monopoly over vital grid infrastructure and have consumers over a barrel. That’s why it is so important for the regulator to do its job.

“Our own data suggest that the group-level profits made by these firms run to the tens of billions and are part of a wider energy industry that has made over £483bn profits during the energy bills crisis. These excesses, along with our reliance on volatile fossil gas prices, market flaws and our leaky housing stock are why energy bills remain at such high levels.”

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