Starting from July 1st 2025, Ofgem has lowered the energy price cap for households on standard variable (default) tariffs paying by direct debit. The annual limit drops from £1,849 to £1,720, saving an average of £129 per year—about £10–11 per month. This is the first cut after three consecutive rises.
What this means for you:
- Electricity will be capped at 25.73p per kWh, with a £0.5137 standing charge per day.
- Gas will be capped at 6.33p per kWh, with a £0.2982 daily standing charge.
- Payments by other methods (standard credit, prepay, Economy 7) are also covered under the cap.
Why Prices Are Falling
The primary driver is a decline in global wholesale energy prices, especially gas, compared to earlier in the year. Ofgem’s recalculations also reflect slight reductions in supplier costs like operating overheads. However, standing charges remain consistent.
Despite the drop, typical dual-fuel bills are still around £600 higher than pre-crisis levels – a reminder that overall energy remains comparatively costly.
What Households Need To Do
Submit a meter reading close to July 1st if you don’t have a smart meter. Without it, suppliers may estimate usage, which could result in overpayment.
Check deadlines by supplier:
- British Gas: until July 14th
- OVO: July 11th
- EON Next: July 6th
- Octopus: July 8th
- EDF: July 10th
- Utility Warehouse: five days leading up to July 1st
If you are struggling, reach out for support:
- British Gas Energy Trust offers up to £2000.
- EDF, EON, Octopus and others provide grants or repayment schemes.
- Vulnerable households can join the Priority Services Register for extra protections.
- Companies like Energy Advice Helpline offer free advice, and can help you access Government-backed grants.
Consider switching to a fixed tariff – these can sometimes beat the cap. For example, one fixed deal currently stands at around £1517/year, delivering potential savings over the cap.
What Lies Ahead
The price cap mechanism reviews costs every three months, so the next update will cover October to December 2025.
Analyst forecast modest increases in the next two quarters ( +2-3% around Autumn and early 2026) assuming wholesale prices remain unchanged.
This cap reduction brings genuine relief – about £10 a month for typical households. But it’s capped structure means heavy users pay more, and the cap applies only to standard tariffs. With fixed deals and meters under pressure, it’s worth:
- Submitting accurate meter readings ASAP.
- Exploring fixed-rate tariffs.
- Seeking assistance if needed.
Even with this drop, overall household energy costs remain elevated compared to pre-2022, underlining the importance of energy efficiency, tariff comparison, and financial support routines.