Energy bills are set to rise by five per cent from April, marking the third consecutive increase in the price cap, according to the latest forecasts from Cornwall Insight.
The energy consultancy predicts a typical household will pay £1,823 annually for gas and electricity from April to June 2025, up £85 from the current energy price cap of £1,738.
Industry regulator Ofgem will officially announce the new price cap on Tuesday, February 25 with cold weather and reduced renewable energy production set to drive the latest price increase, as gas storage levels fell across Europe.
This combination of these factors has led to sharp rises in wholesale prices on the volatile international market, and while the situation has been anticipated, recent weeks have seen steeper increases due to the weather conditions.
The impact extends beyond energy bills, with the upcoming Consumer Price Index (CPI) report expected to show rising prices, potentially driving higher inflation.
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Analysts have published the latest predictions for the Ofgem energy price cap
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Dr Craig Lowrey, the principal consultant at Cornwall Insight, said: "Households have been hit hard over the past few months, and with bills set to rise for a third consecutive time the pressure is not letting up."
"While we're not seeing a return to the peak of the energy crisis, the market is more volatile than it has been in quite some time, and households are bearing the brunt of cold weather and low gas storage levels across Europe," he added.
Talks between Russian and American officials over the Ukraine conflict have caused gas prices to fall, though too late to affect April's cap. Prices are expected to drop slightly in the third quarter of 2025, before rising again in October.
Several Ofgem consultations on the price cap's future structure have added uncertainty to the outlook. Lowrey emphasised that rising costs reinforce the need to accelerate renewable energy expansion across the UK.
Households have been using smart meters to keep track of their energy usage PA"It might be tempting to look at rising bills and conclude that the push towards renewables is not working," he said. "But the reality is higher energy costs only reinforce the need to accelerate our expansion of clean, reliable energy across the UK.
"The transition requires significant market reform and investment, but aims to reduce dependence on volatile international wholesale markets.
According to Cornwall Insight, the Government must consider both immediate and medium-term measures to protect consumers from rising costs, Cornwall Insight warns.
Options include introducing social tariffs to support vulnerable households and investing in housing energy efficiency. One-off payments could also provide crucial support over the next year.
"Short-term measures, from social tariffs to one-off payments, will be crucial to ensure that the most vulnerable are protected," Lowrey said.
He also warned against letting costs fall "disproportionately on those least able to afford it."
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Britons have struggled with energy bills in recent years
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National Energy Action's chief executive Adam Scorer said: "This will be a third successive increase in energy bills, coming after three years of abnormally high energy bills. Wholesale prices suggest a further rise in summer. It will feel like an interminable winter for so many, with energy a luxury they simply cannot afford.
"There is no getting used to this new normal for the people we try to help. Millions of the most vulnerable households are struggling with debt and severely rationing their heating.
"Households need further action from the Government. National Energy Action is calling for additional targeted energy bill support through a social tariff or an expanded Warm Home Discount; a help-to-repay scheme to support households out of debt; and for the Government’s Warm Homes Plan to be the big game-changer that will actually turn cold properties into warm homes for the poorest households."
Warm This Winter spokesperson Caroline Simpson added "It’s soul-destroying that there will be another price cap rise. What billpayers don't know is that even their electricity bills are chained to gas prices. This over-reliance on gas - both for our heating and in setting the electricity price - is why we saw huge hikes in bills four years ago and now we are seeing prices set to rise again."
A Department for Energy Security and Net Zero spokesperson said: "Every family and business has paid the price of rising energy bills, which are a direct result of Britain’s vulnerability to volatile global gas markets.
"By failing to invest at scale over many years in the clean, secure, homegrown power our country needs, we have been left exposed to the consequences of events beyond our borders.
"The only way to bring down bills for good is by making Britain a clean energy superpower, which will ensure our energy security, protect consumers, create jobs and tackle the climate crisis."
