OFGEM Energy price cap update: what the changes might mean for you
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OFGEM has today announced a drop in the energy price cap, reducing average energy bills by £129 from July 1st[1]. This follows three consecutive increases and will help to ease some of the financial pressure on millions of homes.
Read on to find out what’s changing, how it might affect your energy costs and what support’s available if you’re struggling to keep up with bills.
What is the energy price cap?
The energy price cap is a limit set by OFGEM on what suppliers can charge you for each unit of gas and electricity, as well as the daily standing charge[2]. It applies to customers on standard variable tariffs, including those who pay by:
- Standard Credit, which is a payment made when you get your energy bill
- Direct Debit
- Prepayment meter
- Economy 7 (E7) Meter, which charges different rates for day and night usage
It’s designed so that prices closely reflect the actual cost of supplying energy and it’s decided by what OFGEM considers typical energy use for the average UK household.
This means your bill might be either higher or lower depending on your household’s actual energy use.
OFGEM reviews the cap every three months, so it can rise or fall throughout the year, depending on changes in the wholesale energy market.
What’s the current cap?
From 1 April to 30 June 2025, the energy price cap is set at £1,849 per year for a typical household on a dual fuel tariff (using both electricity and gas) and paying by Direct Debit. This marks a 6.4% increase from the previous cap of £1,738, which was in place from 1 January to 31 March 2025.
Currently, unit rates and standing charges are:
- Electricity: 27.03p per kWh, with a daily standing charge of 53.80p
- Gas: 6.99p per kWh, with a daily standing charge of 32.67p
What’s changing?
From 1 July to 30 September 2025, OFGEM has announced today that the cap will fall to £1,720 per year, a 7% decrease from the current level.
This means the new unit rates and standing charges from July to September will be:
New cap (July to September 2025):
- Electricity: 25.73p per kWh, 51.37p daily standing charge
- Gas: 6.33p per kWh, 29.82p daily standing charge
This means many households should see a drop in their energy bills over the summer months – though how much you save will depend on your usage.
How might this affect me?
While it’s important to remember that your overall costs may still depend on energy usage, lower unit rates and standing charges could mean smaller bills for many people.
It’s important to remember that energy prices are still considerably higher than in recent years:
- The new cap is £660 (28%) lower than at the peak of the energy crisis at the start of 2023.
- But it’s still £152 (10%) higher than the same period last year[3].
Can I ‘beat the cap’?
Some fixed tariffs are now available that could save you around £200 compared to the new cap.
Fixing your tariff means locking in your unit rates and standing charges for a set period – usually 12, 24 or even 36 months, which can help protect you from future price rises and make your bills more predictable.
- Around 35% of households are now on fixed deals, up from just 15% a year ago.
- From 1 July, standing charges for Direct Debit and prepayment meter customers will drop by around £19 on average, as part of OFGEM’s efforts to make bills fairer.
If you’re thinking about switching to a fixed deal, it’s important to take your time to compare options carefully. Make sure the tariff suits your needs and check for any exit fees or contract terms.
If you’re worried about affording your energy bills, we’re here to help. Call us on 0800 813 1833, connect to us on Live Chat or fill out our form to speak to us on WhatsApp.
It’s also worth checking whether you’re eligible for extra help. BudgetSmart has lots of tips and tools to guide you on maximising your income and making savings within your budget.
[1] Energy price cap will fall by 7% from July | Ofgem
[2] Changes to energy price cap between 1 April and 30 June 2025 | Ofgem