Rising energy bills: what you need to know
Source: gov.uk (2025-02-25)

A summary of why energy prices are rising and how clean power will protect households from unstable global fossil fuel markets.

What is the price cap?

The price cap is the maximum amount energy suppliers can charge consumers on default tariffs for each unit of energy and standing charge.

The new price cap figure, quoted at £1,849 - represents the projected annual energy cost for a typical household, based on this maximum charge for each unit of energy and standing charges. This is 6.4% higher than the figure for the first 3 months of 2025.

In practice, this rise will mean an increase of around £9 per month for a typical household over the next 3 months.

People’s actual bills will still vary depending on their energy usage, region and payment type.

This projection is adjusted every 3 months. The next announcement will be in May 2025 for the July to September price cap level. The price cap level set in February 2025 will only apply to bills from 1 April to 30 June.

Why are energy bills rising?

International gas prices have risen, bringing British energy bills up with them.

That’s because the price we pay for energy in the UK is set by gas prices on the global market, over which we have no control.

As a result of recent events that have affected the market, which the whole of Europe is dealing with, wholesale gas prices covered by the period of this price cap are around 15% higher than they were in the period covered under the previous price cap. This is comparable to the rise in prices across Europe.

Around 80% of this increase to the price cap level between Q1 2025 and Q2 2025 is a consequence of the increase in the wholesale price of gas.

Why have international gas prices risen?

The UK’s gas network is interconnected with Europe and with the global market through liquefied natural gas imports, meaning that factors affecting European gas prices affect our prices too.

Across the Channel a perfect storm of factors drove a steep increase in the wholesale price of gas since the start of 2025.

The pipeline delivering Russian gas to European countries through Ukraine was switched off at the start of the year, a consequence of the continuing war between Russia and Ukraine.

How does the UK compare to other European countries?

Wholesale gas prices have risen consistently across Europe over the past few months.

However, Britain’s power system, inherited from the previous government, is more heavily reliant on gas than some other European countries, which is why the UK’s electricity prices are higher than those of some countries with less reliance on gas.

Norway, for example, gets much of its energy from hydropower, while France has historically invested more in nuclear power. As a result, these countries currently have lower electricity bills than the UK.

Other countries with lower bills, like Spain, have a warmer climate and lower heating requirements. Spain has also invested heavily in renewable energy sources, including solar and wind power.

Our plan for clean power by 2030 will reduce our reliance on gas, and moving to a system that that is primarily based on homegrown renewable power sources can bring down bills for households and businesses for good.