Energy price cap falls 7% to £1,720 for a typical household

The energy price cap fell by 7 per cent on 1 July 2025, taking the annual bill for a typical household paying by direct debit from £1,849 to £1,720¹. The new cap runs from 1 July to 30 September². Ofgem, the energy regulator, announced the level on 23 May 2025⁴.

The cap limits unit rates and standing charges rather than the total bill, so households using more than the typical amount pay more than the headline figure³. Ofgem defines medium use as 11,500kWh of gas and 2,700kWh of electricity a year³. The new average rates are 25.73p per kWh for electricity and 6.33p per kWh for gas, with daily standing charges of 51.37p and 29.82p respectively⁴. Electricity unit rates fall from an average 27.03p and gas from 6.99p³. Prepayment customers pay the same standing charges but slightly lower unit rates³. The cap does not apply in Northern Ireland, and does not apply to households on a fixed deal³.

Which? put the change at about £129 a year, or £11 a month, and said a typical household would pay around £143 a month for gas and electricity used between July and September, against £154 now³. Its figures for other usage levels are below³.

National Energy Action said the new level is still around £580 a year more than the average annual bill in April 2021¹. Fuel Bank Foundation put the pre-crisis average annual cost at around £1,200⁵.

"It's welcome that the price cap is falling after a series of rises, but energy bills will still be significantly higher than they were before the energy crisis."

Fuel Bank Foundation said 42 per cent of the people it supports have a critical year-round need for energy, and that the summer months give households a chance to prepare for winter, when it expects bills to rise again⁵. Uswitch said experts were predicting a higher cap from October, at a time of year when usage increases². Which? said early predictions were that the October cap would stay around a similar level³. The next cap will be announced in August to take effect in October².

Why it matters for households

The cap sets the maximum a supplier can charge per unit and per day on a variable tariff, so a lower cap means lower rates for the roughly 65 per cent of customers Ofgem estimated were on price-capped tariffs as of April 2025³. Households on fixed deals see no change from this announcement³. The fall is seasonal as well as structural: it applies over summer, when homes use less energy, and both charities quoted expect pressure to return in winter¹.

For a home's energy independence, the cap changes the price of each unit bought but not the exposure to wholesale gas, which the End Fuel Poverty Coalition said remains closely linked to volatile global markets under the marginal pricing model⁶. The Coalition also warned that many of the most competitive tariffs are now only available to customers with working smart meters, and that households without them are locked out of the cheapest deals⁶. It said it had raised concerns about the effect of time-of-use tariffs on groups less able to shift demand to other times of day⁶.

What happens next

The current cap runs to 30 September 2025². The next cap is announced in August and takes effect in October². Uswitch said experts predict the next cap will be higher²; Which? said early predictions were for a similar level³. Fuel Bank Foundation said bills are predicted to increase again in winter⁵.

Sources6 cited

1. Price cap falling tomorrow ‘welcome’ but energy bills ‘remain punishingly high’ - National Energy Action (NEA), nea.org.uk
2. July 2025 energy price cap comes into effect with 7% drop - Uswitch, uswitch.com
3. The energy price cap will fall by 7% in July – should you fix a tariff? - Which?, which.co.uk
4. Energy price cap to drop to £1,720 in July 2025 - Uswitch, uswitch.com
5. Energy Price Cap: Fuel Bank Foundation advises households to act now for winter | Fuel Bank Foundation, fuelbankfoundation.org
6. Smart meter rule changes needed as July price cap change comes in - End Fuel Poverty Coalition, endfuelpoverty.org.uk