- Energy bills will fall by £129 for an average household per year, or around £11 a month, from July
- Ofgem recommends considering a fixed rate tariff
- The price fall comes amid a drop in the wholesale price of gas
Energy bills for a typical household will fall by £129 a year from 1st July to September 2025 due to a drop in the price of wholesale gas, energy regulator Ofgem announced today (23 May).
The fall means a typical dual-fuel household will see their annual bill fall to £1,720 a year from the current annual price cap of £1,849.
Ofgem’s Energy Price Cap is set every three months and puts a limit on what suppliers can charge consumers for each unit of energy. It impacts the bills of more than 20 million households in England, Wales and Scotland.
The price cap from July is set to be £660 (28%) lower than the height of the energy crisis at the start of 2023 when the government implemented the energy price guarantee. However, Ofgem said prices remain high with the upcoming level £152 (10%) higher than the same period last year.
In a statement, Ofgem said 90% of the fall was due to “a recent fall in wholesale prices”, with the remainder being primarily due to “changes to the operating cost allowances energy suppliers can recover”.
Direct debit and prepayment customers will also see standing charges fall by around £19 per year on average, it said.
Time Jarvis, director general of markets at Ofgem, described the fall as “welcome news for consumers”.
“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you,” Jarvis explained.
He also said that changing payment method to direct debit or smart pay as you go can save consumers up to £136.
However, Jarvis also said the UK needs an energy system where “prices are insulated from the volatile international gas market”, which “ensures more stable prices and energy security”.
“We’re working closely with government to get the investment we need to reach our clean power and net zero targets as quickly as possible,” he stated.
“We’re also doing everything we can to support consumers today and pushing ahead with more changes to help consumers. This includes working on ways to support those trapped in energy debt and bringing in reforms to standing charge tariffs for this winter.”
The energy price cap announcement also ensures prices for people on a default tariff (standard variable) are fair and reflect the cost of energy.
Households are covered by the price cap by either:
- Standard credit (payment made when you get your electricity and gas bill)
- Direct debit
- Prepayment meter
- Economy 7 meter
The announcement follows water and council tax increases, too.
Electricity and gas unit prices from 1 July to September 2025
The cost of electricity and gas per kWh changes every three months.
Until 30 May, electricity prices per kWh is 27.03p and gas is 6.99p.
From July, this will fall to 25.73p per kWh for electricity and 6.33p per kWh for gas.
Households also pay a daily standard, which will be 51.57p for electricity and 28.82p for gas from July. All pricing is inclusive of 5% VAT.
Overall, a typical household will be paying £129 less a year for their energy bills, or £11 less a month.
For a full list of your region, check out the Ofgem website or our guide on What’s the price of electricity per kWh right now?
Energy Price Cap tracker
Take a look at how the Energy Price Cap has changed since it was first introduced in January 2019 in our chart below.
Between October 2022 and March 2023, during a period of particularly high gas prices, the government provided households with £400 through the Energy Bills Support Scheme (EBSS). This was paid via monthly installments and was reflected on household energy bills.
While energy prices have come down significantly since that period, they have still not returned to pre-Covid levels.
What are the most cost-effective ways to reduce energy bills?
If you’ve been pushing energy-saving solutions to the bottom of your to-do list, now is the time to change that.
Some changes require significant upfront costs, a huge barrier, especially as households are grappling with the cost of living crisis. However, others are low cost to install.
The first thing we recommend is check your house for any draughts. If you find the source, you can then research suitable solutions, as draught-proofing windows and doors can save you roughly £35 a year.
For your doors, you can get a draught door excluder – a long, stuffed, cushion-type device that’s heavy enough to block out draughts. It lays across the door and will prevent cold outside air from coming into your home. You will be able to buy these in most discounted retail stores or online for a small cost. Prices range from £4 to £30.
Other changes include:
- Install LEDs: Swap your bulbs for LEDs, each bulb can save up to £5 a year on electricity. You’re also less likely to need to replace them as often as standard bulbs
- Look after your fridge: Avoid putting warm food in it straight away as it works harder to cool down. Regularly clean it too.
- Utulise food waste apps: Apps, such as Too Good to Go, allow you to buy food at a discounted rate. They often go past their sell by date meaning stores can no longer stock it, but it’s still good to consume. This can help save money on lunches or other meals.
- Replace worn-out windows: Almost 45% of energy escapes from windows, so if you’ve yet to install double-glazing, it might be worth looking into.
- Insulate your home: There are different types of insulation to consider, such as cavity wall and pipe insulation.
Get a double-glazing quote
Answer a few simple questions, and a trusted double-glazing installer will be in touch with a bespoke quote for your home.
There are lots of other ways to reduce your energy bills, but you can dive into fourteen ways by using our guide.
Also check out our guide on improving your EPC rating, as this can also help reduce your energy bills overall.
Think about renewable energy options
According to The Eco Experts National Home Energy Survey 2024, more than half of homeowners cite reducing their energy bills as a key motivation for adopting low-carbon technology and renewable energy.
The most-common forms of low-carbon technology include:
Get a solar panel quote
Answer a few simple questions, and a trusted solar panel installer will be in touch with a bespoke quote for your home or business.
Some will require high upfront costs, but there are government incentives to help:
- The Boiler Upgrade Scheme
- ECO4 Scheme
- Warmer homes Scotland
- Nest – for households in Wales
- Warm Homes Local Grant
Prior to March of 2025 (when applications were closed, you could also apply for the Home Upgrade Grant. This has largely been replaced with the Warm Homes Local Grant, however.
Some installers also offer finance options to help you spread the upfront costs.
What can you do if you’re struggling?
High bills in recent years have led to ballooning levels of customer debt to suppliers, with just under £4bn owed to suppliers.
Dame Clare Moriarty, chief executive, Citizens Advice, told the BBC that the latest energy price cap announcement would be “cold comfort to the millions paying off a mountain of debt on top of their monthly costs”.
She told the BBC: “The government has said it hopes to provide more support to pensioners this winter, but we know that people with children are often struggling most of all with energy.
“It must provide more targeted energy bill support to those hardest hit, and upgrade 5 million homes with energy efficiency measures.”
If you’re struggling to pay your energy bills, the first port of call should be to contact your energy supplier.
You can ask about a payment plan that works for you, ask about any hardship funds or ask if you can pay smaller amounts more often.
Also check to see if you qualify for any grants or schemes from your local authority. Some charities have hardship funds, too. You might also qualify for benefits.
What are the early energy price predictions for October?
Cornwall Insight said its latest predictions for the October-December show little change from the newly-announced July figures, standing at a forecasted £1,727 per year.
“While our current forecast points to little overall change in the October cap, there are still three months to go, and much could change – particularly in the wholesale market,” said Dr Craig Lowrey, principal consultant, Cornwall Insight.
“The UK’s heavy reliance on imported energy leaves it very vulnerable to international market volatility. Developments in areas, such as the Ukraine-Russia negotiations, EU-US trade talks, or even changing weather patterns, could all push prices up or down in the months ahead.”
Lowrey also added that with the several policy decisions that are being taken by Ofgem prior to the winter cap being announced, including the finalisation of longer-term arrangements for covering the supplier costs associated with consumer debt, could also have a notable influence of the October cap.
“This fall in the Energy Price Cap is undoubtedly welcome news for households, offering a degree of relief at a time when many are grappling with high living costs, and rising inflation,” he said.
“Lower prices in the warmer months are helpful, but the real benefit could come in October. With energy use typically rising as we head into winter, any drop in bills later in the year would be especially valuable for families trying to manage the high costs in the lead up to the Christmas period.”
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While Lowrey said it’s important to celebrate the “small wins”, the energy market remains unpredictable.
“We know recent declines in wholesale prices have helped bring the cap down, but global events can quickly reverse that trend,” he said.
“Plus, even with the cap coming down, bills are still higher than what we used to consider ‘normal’, so support is still very much needed. The outlook may be improving, but we’re not out of the woods yet, and energy affordability must remain a priority.”
