Ofgem is expected to confirm that household energy bills will fall by around 7% from July when it updates its latest price cap on Friday. The average bill is expected to fall by £129 to £1,720 per year when the regulator’s new price cap comes into force, experts at Cornwall Insight have predicted.
The price cap is currently set at £1,849 for a typical household after three consecutive increases in bills. It is set to fall after US President Donald Trump’s aggressive tariff plans led to a significant slump in gas and oil prices.
Tim Jarvis, Director General of Markets at Ofgem, said: “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.
“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.”
The predicted drop is slightly less than the previously forecast 9% fall following an easing of trade tensions in recent weeks. Cornwall Insight said it expects the reduced price cap to be followed by a “modest drop” in October and another similar dip in January next year.
News of a fall in energy costs will come as a relief for households, who suffered through an “awful April” of bill rises, including Ofgem’s last 6.4% price cap increase. Under-pressure households have also been hit with the biggest increase to water bills since at least February 1988, alongside steep increases across bills for council tax, mobile and broadband tariffs, as well as road tax.
Bill rises have led to Consumer Prices Index (CPI) inflation jumping to 3.5% in April, up from 2.6% in March and the highest since January 2024.
The Chief Executive of National Energy Action – a fuel poverty charity – Adam Scorer says, “Any fall in the price of energy is always welcome news, but this is a short fall from a great height. Bills remain punishingly high for low-income households. Four years of extraordinarily high energy bills has taken its toll. We hear heart-breaking cases every day.
“The likely expansion in eligibility for the Winter Fuel Payment will be a relief for some, but National Energy Action is calling for deeper energy bill support and a real focus to support households out of debt.” Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use. It does not limit total bills, because householders still pay for the amount of energy they consume.
You can work out how the new changes will impact you using our Energy Price Cap calculator tool.
Looking for more from MyLondon? Subscribe to our daily newsletters here for the latest and greatest updates from across London.
