From April, typical energy bills for UK households are set to rise to £1,849 a year. This is a £159 increase compared to last year, and it marks the third consecutive rise in the price cap. Ofgem, the industry regulator, has adjusted the price cap in response to higher energy costs. But why are prices going up, and how will it affect you? Let’s take a closer look at what’s happening and what you can expect.

Why Are Energy Prices Going Up?

The main driver behind this increase is the rise in wholesale gas prices. Since the start of the year, Europe has seen a spike in gas prices due to high demand, partly caused by colder weather. This has put pressure on gas supplies and increased costs for the UK, which relies heavily on gas for home heating and electricity.
Ofgem has said that most of the increase in energy prices is due to rising gas costs, with only a small part of the rise attributed to inflation and policy costs. Energy debts have also reached record levels, making the situation more challenging for many households.

What Is the Energy Price Cap?

The energy price cap sets a limit on how much suppliers can charge for each unit of energy. Ofgem reviews the cap every three months. From April, the cap will increase, meaning typical energy bills will go up by 6.4%, or about £9.25 a month.
However, not everyone will be affected by this increase. Around 11 million households are on fixed-rate deals and will not see any change until their current contract expires. Since November, an additional four million homes have locked in a fixed-rate tariff, which means they’re shielded from this latest rise.

When Will Prices Start to Fall?

While gas prices are expected to remain high in the short term, market analysts predict a slight decrease in energy bills by July. Cornwell Insight forecasts a fall to around £1,756 a year, but they have warned that this could change due to ongoing market fluctuations. For now, the outlook is that energy prices will remain elevated for the foreseeable future.

What Else Is Rising in April?

Energy bills aren’t the only cost increasing in April. Council tax and water bills will also rise. However, some people may see an increase in their wages, as both the minimum wage and living wage are set to rise in April. Employers will also face higher national insurance contributions, which could have an impact on businesses and employees alike.

The Bigger Picture: Moving Towards Renewable Energy

In the long term, the UK government is working to reduce its reliance on imported gas. Significant investments are being made in renewable energy sources, like wind and solar power, which could help lower energy costs in the future. The government has set a target of 95% clean electricity by 2030, which could reduce the impact of rising gas prices over time.
For now, though, consumers will need to deal with the rising costs. While it may take years for renewable energy to fully replace gas, these investments are an important step toward reducing the country’s energy vulnerability in the future.

How Can Households Manage Rising Costs?

With energy prices going up, it’s important for households to take steps to reduce energy consumption and manage costs. Here are some practical tips:
  • Switch Suppliers: If you’re on a variable tariff, it might be worth shopping around for a better deal. Some suppliers offer fixed-rate plans that could protect you from future price hikes.
  • Improve Energy Efficiency: Simple measures, such as ensuring your home is well-insulated, or upgrading to energy-efficient appliances, can help reduce energy use.
  • Government Support: Check if you qualify for any government grants or schemes that can help with energy costs.
  • Reduce Energy Usage: Turn off lights when you don’t need them, adjust your thermostat, and use energy-efficient appliances to lower your monthly bills.

Conclusion

The rise in energy bills this April is a direct result of increasing gas prices, which have been driven by higher demand across Europe. While the price cap protects consumers from unlimited price increases, many households will still face higher bills. The situation is complicated by the ongoing volatility in the energy market, but some hope for price reductions exists in the months to come.
In the meantime, households can take steps to reduce their energy use and seek out support to help with rising costs. The government’s investment in renewable energy will hopefully bring longer-term stability to the energy market and reduce reliance on costly gas imports.