If you’re moving home this summer, there’s some encouraging news when it comes to your energy bills. From 1 July 2025, the energy price cap, which limits what suppliers can charge on standard variable tariffs, will drop by 7%, offering some relief to millions of households across England, Scotland, and Wales.
Here’s everything you need to know about the upcoming changes and how they might affect your energy costs.
What’s changing in July?
The energy regulator Ofgem has announced that the price cap will drop by 7% from 1st July. For a typical household using average amounts of gas and electricity, this means:
- Annual bills will fall from £1,849 to £1,720 – a saving of £129 per year
- Daily standing charges are also reducing – electricity from 53.8p to 51.37p per day, and gas from 32.67p to 29.82p per day
New energy price cap rates
- Electricity: 25.73p per kWh (down from 27.03p)
- Gas: 6.33p per kWh (down from 6.99p)
Understanding the Price Cap
The energy price cap, set by the regulator Ofgem, limits the unit rates and standing charges suppliers can charge on standard variable tariffs. It’s updated every three months and is based largely on the cost of wholesale energy.
The cap applies to the price per unit of energy you use, not your entire bill. If you use more energy than the typical household (which Ofgem defines as 11,500 kWh of gas and 2,700 kWh of electricity annually), you’ll pay more than the quoted figures.
Here are the estimated energy usage set by Ofgem:
| Energy Use | Example – home type and number of residents | Typical annual gas use (kWh) | Typical annual electricity use (kWh) | Typical annual electricity use (multi-rate, such as Economy 7) (kWh) |
|---|---|---|---|---|
| Low | Flat or 1-bedroom house; 1 to 2 people | 7,500 | 1,800 | 2,200 |
| Medium | 2-3 bedroom house; 2 to 3 people | 11,500 | 2,700 | 3,900 |
| High | 4+ bedroom home; 4 to 5 people | 17,000 | 4,100 | 6,700 |
Could you save more by switching?
Here’s where it gets interesting for households: while the price cap is falling, there are potentially even better deals available through fixed-rate tariffs.
According to recent market analysis, some of the cheapest fixed deals could save households:
- Up to £334 compared to current price cap levels
- Around £205 compared to July’s reduced cap
- More than £95 annually for typical usage households
Tim Jarvis, director general of markets at Ofgem, emphasises: “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.”
Fixed vs Variable: Which is right for you?
Currently, 35% of households are on fixed tariffs – a significant increase from just 15% a year ago.
Fixed deals offer:
Advantages:
- Price certainty for 12 months or more
- Protection from future price rises
- Potential savings compared to the price cap
- Predictable monthly payments
You would benefit from a fixed deal if you:
- prefer certainty in your monthly bills
- have found a deal significantly cheaper than the price cap
- are setting up energy in a new home and want a fresh start
However:
- You won’t benefit from price cap reductions while fixed
- Some deals may have exit fees if you want to switch early
- Market conditions can change during your fixed term
Stick with a variable tariff if you:
- Think prices might fall further later this year
- Want the flexibility to switch without paying exit fees
- Already have a low-use household or energy-efficient property
Is energy switching available to everyone?
While switching can offer significant savings, it’s not available to everyone. You may not be able to switch if you:
- are in debt to your current supplier
- have certain types of meters or payment arrangements
- are in the process of moving home
Do these ahead of the price cap changes
The July price cap reduction provides welcome relief, but it’s also a good time to review your energy setup. Whether you’re moving home or staying put, consider:
- Calculate your potential savings from the price cap reduction
- Compare fixed-rate deals that might offer even better value
- Check with your current supplier about their best available rates
- Consider your usage patterns and whether a fixed deal suits your circumstances
- Take your meter readings before the new price cap is in effect to ensure accurate billing
Energy companies may release even more competitive offers as they adjust to the new cap levels, so it’s worth keeping an eye on the market over the coming weeks.
Looking ahead
While prices are falling now, predictions suggest the October price cap is likely to remain at similar levels to July’s rates. Combined with currently competitive fixed-rate options, our Connection Experts believe it is an optimal time to secure a good energy deal. If you’re moving and would like to set up your home with a good value energy tariff ahead of price cap changes, sign up today and we’ll look for the best deals for you.
