Market News
UK Households Set for Further Squeeze From Energy Bills - BLOOMBERG
(Bloomberg) -- The UK energy price cap is forecast to rise for a third consecutive time in April, the latest setback in the government’s attempt to lower bills for homes and businesses.
One of the Labour government’s main election pledges was to bring down bills after homes and businesses were severely stung by the energy crisis. But volatile wholesale markets for both gas and power is making that promise very difficult to fulfill.
Energy consultancy Cornwall Insight Ltd. predicts a 1% rise for the typical tariff to £1,762 ($2,249) in the second quarter, the first year-on-year increase since 2023. The limit, set every three months by the regulator Ofgem, is already due to increase by 1.2% in January, according to figures published last month.
“Energy bills in 2025 are shaping up to reflect a perfect storm of regulatory changes and market turbulence,” said Craig Lowrey, principal consultant at Cornwall. “The market is unlikely to lower bills, and affordability and fuel poverty will continue to be a pressing issue.”
The Ofgem price cap, which represents an annual bill for a typical household, is largely a reflection of wholesale power and gas prices. The latest increase is mostly due to global market dynamics linked to geopolitical risks in the war in Ukraine. Rising costs may also pose a problem for the Bank of England as it tries to keep inflation in check.
Funding a program to support energy intensive industries may also be added onto bills from April, according to the analysis. This measure as well as the potential extension of Ofgem’s existing Supplier Bad Debt Allowance could add £20 onto bills annually.
Bills had been expected to drop by 1.4% from April, according to previous analysis from Cornwall. The latest forecast shows bills falling in July.
