April has arrived with a mix of complexity and consequence for UK businesses managing energy and utility costs. It’s not just a question of whether prices are going up, it’s about why they’re changing, by how much, and what this means for your forward planning. Whether you’re working in procurement, finance, or operations, it’s becoming increasingly difficult to make sound decisions without understanding the broader context behind these shifts.
In this month’s market breakdown, we’re unpacking the most pressing changes across energy and water markets, non-commodity charges and policy developments. With this clarity, you’ll be better placed to plan, mitigate risk and spot strategic opportunities.
Electricity and Gas
April’s economic backdrop has become increasingly challenging, with global trade tensions weighing on sentiment. In the Eurozone, business confidence dropped sharply following President Trump’s latest tariff announcements, and economic activity is now approaching stagnation. The European Central Bank responded with its seventh interest rate cut this year, lowering rates by 25 basis points to 2.25%. In the UK, private sector output fell at the fastest rate in over two years, with manufacturing and services both contracting and export orders hitting their lowest levels since May 2020. The downturn adds pressure on the Bank of England to cut interest rates in May.
Energy markets have mirrored these concerns. Brent crude dropped by over $15 in early April to below $60 per barrel, its lowest point in four years, before rebounding slightly to $63 as tariff implementations were delayed. In the gas market, the EU is considering reducing its gas storage target from 90% to 83% by December, while Norway’s Hammerfest LNG facility, responsible for around 5% of its gas exports, is offline for maintenance until July. Power prices are also under pressure due to strong solar output, with UK summer demand forecast to hit record lows. While gas and power prices continue to decline, sluggish storage injections - just 4.7% this month - highlight potential risks later in the year. Against this backdrop, current market conditions present a strong opportunity for increasing hedging ratios into the coming seasons.
Non-Commodity Costs
While wholesale prices grab the headlines, it’s often non-commodity costs (those ‘hidden’ charges) that quietly tip budgets over the edge. April has seen further increases in network and policy costs that are largely outside a supplier’s control but directly impact end users.
The biggest structural change that April has brought on is the introduction of yet another line item to invoices, the EII Support Levy. This new charge is established to provide funding for further cost reductions to Energy Intensive Industries and adds more than a £1/MWh charge to energy invoices of all non-EII consumers. The rate is to be charged by the supplier and then regularly reconciled for those on pass-through contracts.
April is also the time to reset all the transmission and distribution related charges among others. Distribution Use of System charges are one of the largest components of an electricity bill that account for 10-20% of the electricity costs monthly. This April again brings a restructuring in the cost elements, with capacity charges approximately doubling across the board, while the fixed rates are dropping across almost all regions to compensate for the capacity increase. The overall cost impact of the changes is neutral or positive to many users, however, it provides a great incentive for organisations to review their Maximum Import Capacity. Unused capacity has never cost more than it will from May 25 invoices onwards.
Transmission Network Use of System (TNUoS) charges, which cover the cost of operating and maintaining the high-voltage grid, have increased significantly compared to Apr 24-Mar 25. Different user types will experience various levels of increase, though. While a Low Voltage connected customers with no Maximum Import Capacity in Residual Band 1 (LV_NoMIC_1) will see over a 120% increase in tariffs, an average Low Voltage customer will have to face a 14-24% increase depending on their available capacity and Banding. The fixed tariff for High Voltage users has increased by 30% on average and there is a relatively smaller change in EHV costs. Therefore, it’s important to assess the impact on a site-by-site basis.
While most of the charges increased from March to April respectively, there is some good (but temporary) news to share. Balancing Service Use of System (BSUOS) charges have been seasonally set since the tariff reform in Apr 23 . Similarly to the past two years, this April again brings some much-needed relief in the rate following the Winter period, with a 12% drop from the Winter 24 rate to Summer 25, which only slightly eases the financial burden of overall increasing non-commodity charges.
Taken together, electricity third-party charges can now represent 40–60% of a business' energy bill, especially for those with lower consumption but higher available (but not necessarily required) capacity. Understanding how these charges are structured and how your contract passes them through is no longer optional; it is vital for possible cost optimisation, cost forecasting, particularly for finance leaders tasked with long-term budget stability.
Government Policies
One of the most significant shifts in the policy landscape this year is the absence of any replacement for the Energy Bills Discount Scheme (EBDS), which concluded in March 2024. The EBDS had offered limited relief to non-domestic users when wholesale prices spiked, but since its closure, businesses have had to absorb market movements in full. This has increased exposure to volatility, especially for energy-intensive users or those on contracts signed during less favourable market windows.
At the same time, the UK Emissions Trading Scheme (UK ETS) has entered a more ambitious phase. From January 2025, the emissions cap has been tightened in line with the government’s revised net zero trajectory. The result has been a steady rise in carbon allowance prices, which is now being priced into the cost of electricity, particularly for fossil-heavy generation. For businesses with high Scope 2 emissions or those exploring green procurement strategies, this regulatory pressure will make the economic case for renewables increasingly compelling, if approached with clear ROI metrics.
Climate-related levies have remained stable. The Climate Change Levy (CCL) for electricity has been frozen since Apr 21, while gas rates increased steadily to align with electricity for the first time in Apr 24 at 0.775 p/kWh. The same rate will apply to this April-March period, however, as part of the Autumn Budget last year it was announced that the main CCL rates for gas and electricity will be uprated in Apr 26, in line with the Retail Price Index (RPI) to 0.801 p/kWh.
Water Rates
Water prices are often treated as a fixed, low-risk cost but this is changing rapidly. In December 2024, Ofwat issued its final determination for the 2025-2030 period, approving a £104bn investment programme by water companies across England and Wales.
To fund this investment, average wholesale water prices for business users are forecast to rise by 42% before inflation by 2030. The scale of this increase varies significantly by provider. Southern Water’s projected increase is 51%, while Northumbrian Water’s is 18.7%. For businesses operating across regions, this means some sites may experience cost pressures much earlier and more sharply than others.
The funding will support:
• Over 2,800 sewage treatment upgrades to reduce river pollution
• £6bn invested in nutrient reduction to lower fertiliser pollution
• The construction of nine new reservoirs
• £1.5bn for smart metering rollouts.
While these initiatives are crucial to long-term water resilience and environmental standards, they will drive operating costs for many organisations. Forward-thinking businesses are already reassessing their water procurement strategies, reviewing contracts and considering audits to uncover usage inefficiencies.
What Should Businesses Be Doing Now?
The energy and utilities landscape in April 2025 is characterised by rising complexity, increasing costs and growing pressure to balance commercial performance with environmental responsibility. Whether it's reacting to shifts in wholesale energy prices, navigating the intricacies of non-commodity charges, or preparing for the impact of Ofwat’s water pricing overhaul, one thing is clear - businesses can no longer afford to take a passive stance.
Markets are moving faster. Policy is becoming more demanding. And the consequences of inaction are getting more expensive.
If you’re looking for support and clarity in uncertain times, our team is here to help. We work with businesses through strategic procurement, better cost forecasting and cohesive sustainability planning across all sectors, to turn data into decisions and make complexity manageable.
Get in touch today to speak with one of our experts. Together, we’ll build a strategy that puts you back in control.
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