Energy Prices Rising 6.4% in April – Does Your Business Need to Act?

Price Cap to Rise by 6.4% in April – How Does This Affect Your Business?

IT DOESN’T!

You may well be aware now of Ofgem’s plan to increase the price cap in April by 6.4% and have thought, should I lock in my business energy contracts now? The answer is simple—this only applies to residential contracts.

Business energy is subject to the LIVE wholesale market, meaning prices change in real time based on market fluctuations. If wholesale prices drop, businesses can take advantage of lower rates immediately.

Residential energy prices, on the other hand, are reviewed retrospectively every quarter. The price cap is based on the average wholesale costs from the previous three months, meaning residential rates do not react instantly to market changes. Since wholesale prices increased on average over the last quarter compared to the previous one, the residential price cap has now increased by 6.4%. If wholesale markets start to decline, business energy rates can follow suit immediately, while residential rates won't reflect these changes until the next quarterly review.

Don’t Fall for Broker Scare Tactics –

Track the Market Yourself

Do Business Energy Prices Follow Residential Price Cap Changes?

Many businesses search online for "Are business energy prices going up in April?" and may come across misleading information suggesting that business energy prices will rise due to the price cap. This is incorrect. The Ofgem price cap only applies to residential energy, meaning business energy prices are not regulated in the same way.

While some non-capacity costs (such as standing charges) may increase around April, your actual unit rate is dictated by the wholesale market. If wholesale prices drop, your business energy rates could stay the same or even decrease, despite residential price hikes.



Unfortunately, some brokers use this confusion as a scare tactic—telling businesses they need to lock in now because prices are "definitely going up." In reality, the only predictable factor for business energy pricing is market movement.

Residential vs. Business Energy: The Key Differences

Residential Energy Pricing

• Governed by the Ofgem price cap, which limits the amount suppliers can charge per unit of energy.
• The price cap is reviewed every three months, meaning prices can go up or down at set intervals.
• Consumers are protected from extreme wholesale market fluctuations.

Business Energy Pricing

• Not subject to a price cap—rates are driven by the live wholesale energy market.
• Businesses either lock in fixed contracts (for a set period) or remain on variable or out-of-contract rates.
• Prices change daily based on wholesale costs, supply and demand, and government levies.

What’s Actually Changing for Businesses in April?

While wholesale prices are unpredictable, there is one upcoming charge that will impact business customers:

➡️ The EII Nuclear Construction Charge (Effective April 2025)

This new levy will increase business energy bills to help fund nuclear power construction. You can read more about it here: EII Nuclear Construction Charge Business Impact.

How Businesses Should Approach Energy Contracts

Rather than worrying about residential price cap updates, businesses should:



✅ Ignore misleading broker tactics—business prices are not tied to the price cap.

✅ Monitor wholesale market trends, not price cap announcements.

✅ Work with a trusted broker who provides transparent market insights—not scare tactics.

✅ Consider contract timing carefully—lock in when market conditions are favourable.

✅ Stay informed about upcoming charges (like the EII charge) that could impact costs

Final Thoughts

If you’re a business owner, don’t be misled by brokers claiming that the 6.4% price cap increase in April affects your rates—it doesn’t. Business energy prices are dictated by the wholesale market, not the price cap. Make informed decisions based on real market conditions, not media headlines.

If you need expert guidance, Smart Energy Company is here to help you navigate the wholesale market and find the right energy contract for your business.

Need advice on your next renewal? Get in touch with us today!