Energy price cap to fall by 7% from July in the UK – here’s how much less you will be paying
Energy regulator Ofgem has announced a 7% reduction of the energy price cap for the period covering July to September 2025.
A recent fall in wholesale prices is the main driver of the overall reduction, accounting for around 90% of the fall. The remaining difference is primarily due to changes to the operating cost allowances energy suppliers can recover, the regulator said in a statement published on Friday 23 May.
Direct Debit and prepayment customers will see standing charges fall by around £19 per year on average. The price cap – which sets a maximum rate per unit and standing charge that can be billed to customers for their energy use – will fall by £129 for an average household per year, or around £11 a month, over the three-month period of the price cap.
For an average household paying by Direct Debit for dual fuel this equates to £1,720 per year. This is £660 (28%) lower than the height of the energy crisis at the start of 2023 when the government implemented the energy price guarantee. However, prices remain high with the upcoming level £152 (10%) higher than the same period last year, the regulator warned.
“A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy,” said Tim Jarvis, Director General of Markets at Ofgem.
“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. And changing your payment method to direct debit or smart pay as you go can save you up to £136.”
In the longer term, However the UK will need an energy system where prices are insulated from the volatile international gas market, and which ensures more stable prices and energy security, he said.
“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.”
“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.”
