On 1st January 2025, the energy price cap in Scotland, England and Wales was increased by 1.2% and is set to cover January to March. This price cap is set by the UK’s energy regulator, Ofgem, and is essentially a limit on the unit rates and standing charges energy suppliers can charge for their standard variable tariffs.
During these colder months, an increase in energy bills isn’t welcome news to any household, especially as this year millions of pensioners have missed out on the Winter Fuel Payment. In this article, we’ll take a look at how energy prices have changed over the last five years and provide some of our top tips to help reduce your energy bills.
How much are current energy bills?
From 1st January to 31st March 2025, the energy price cap is as follows:
| Electricity | Gas | |
| Unit rates | 24.86p per kWh | 6.34p per kWh |
| Standing charge | 60.97p per day | 31.65p per day |
Your average annual cost for your energy bills can depend on a number of factors such as where you live, how much energy you use, the size of your household and what type of meter you use.
However, with the recent increase, the average cost for gas and electricity for those who pay via Direct Debit is:
- £1,292.44 a year/£107.70 a month for low usage (around 1-2 people)
- £1,819.33 a year/£151.61 a month for medium usage (around 2-3 people)
- £2,484.16 a year/£207.01 a month for high usage (around 4-5 people).
How have energy bills changed over the last five years?
The current energy crisis in the UK began in autumn 2021. From 2013-2020, gas prices were either stable or falling, although electricity prices were on the rise. The average annual price in April 2020 was £1,125.
However, on 1st October 2021, the Ofgem price cap increased by 12% due to an increase in the wholesale price of gas. This was when the Cost of Living Crisis in the UK started, as prices for essential goods started to rise quicker than household incomes.
On 24th February 2022, Russia invaded Ukraine, causing a surge in wholesale energy prices as a lot of countries stopped or reduced energy imports from Russia in response. The Ofgem price cap from 1st April 2022 was up 54% from the previous year, significantly increasing average household energy bills.
On 1st October 2022, the Government’s new Energy Price Guarantee came into effect, overriding the Ofgem price cap, and is set at £2,500 for average annual household energy bill. It remained at this level until 1st October 2023, when the Energy Price Guarantee ended as the Ofgem price gap was lower, at £1,923 a year.
Over the course of 2024, average energy bills started to gradually fall to around £1,738 a year. However in October, they increased once again and as this article discusses, there was a further rise as of January 2025.
Tips for reducing energy bills
The recent rise in energy bills has put financial strain on many households across the UK. However, despite rising costs, there are some steps you take to keep your energy bills to a minimum.
Invest in energy-efficient home improvements
To reduce the amount you spend on your energy bills, there are several household items you can invest in that are designed to keep your home as energy efficient as possible. Ranging from small investments to much larger ones, it’s important to evaluate what would work best for you. Energy efficient investments include:
- Thermal-lined curtains
- LED lighting
- Thermostatic valve on your radiator
- Draught excluders
- Letterbox brush strips
- Heated electric blanket
- Energy-efficient showerhead
- Hot water cylinder insulation jacket
- Energy-efficient boiler.
While these items do include an upfront cost, they can help you reduce your energy consumption over time, therefore saving you money in the long run.
Use a smart meter
Smart meters can help you track your energy usage and see where you could potentially save money. They also ensure your billing is accurate as they automatically send your readings to your supplier, meaning you don’t have to manually enter the amount.
Switch suppliers
You’ll want to be sure that you’re on the best possible deal for your energy usage. You can do this by comparing suppliers and energy tariffs. There are many comparison websites that can help you do this so you can find cheaper tariffs quickly and easily.
Make small changes to your daily habits
When it comes to saving on energy bills, small changes really can go a long way. By implementing some of these into your daily routine, you should be able to reduce your energy consumption:
- Turn down your thermostat
- Turn off radiators in unused rooms
- Switch off the lights when you leave the room
- Only turn your heating on when you’re home
- Unplug devices that are not in use
- Bleed your radiators
- Turn your washing machine temperature down to 30 degrees
- Fill the dishwasher before each cycle
- Only boil the water you need
- Have a shower instead of a bath.
Use Government support schemes
The Government has invested £12 billion into Help to Heat schemes so it’s worth seeing if you qualify for any, as it could help with energy costs. Some of these schemes and grants include:
- Boiler Upgrade Scheme – grants to install low carbon heating systems, such as heat pumps
- Home Upgrade Grant (HUG) – energy efficiency measures and low carbon heating to low income households in the worst performing, off grid gas homes in England
- Social Housing Decarbonisation Fund – aims to upgrade social housing to EPC D which means the home has an energy efficiency rating of 55-68%
- Energy Company Obligation (ECO) – energy suppliers help households reduce home heating costs by fitting energy-saving measures
- Great British Insulation Scheme – helps people to insulate their homes.
Debt management solutions
For households struggling to cope with rising energy bills, it may be worth exploring debt management solutions such as an Individual Voluntary Arrangements (IVA) or a Debt Management Plans (DMP). Both of these can provide structured ways to manage and reduce debt by consolidating debts into manageable payments.
Here at MoneyPlus, we understand the financial impact the energy crisis and rising energy bills are having on households across the UK. If you are struggling with debt at the moment, you can get free debt advice at MoneyHelper. Alternatively, our expert team is here to help you find your solution. Don’t hesitate to get in touch with us today.
