Energy Price Cap: Ofgem drops cap by £129 from July

Yahoo

23-05-2025

Energy bills will fall by £129 in July, as Ofgem announced a drop to the energy price cap.
The decrease means that a typical household in England, Scotland and Wales will now pay £1,720 on average for energy, down from £1,849under the current price cap.
Energy regulator Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
It's worth noting that the cap does not set the maximum a household will pay for their energy but limits the amount providers can charge them per unit of gas or electricity, so those who use more energy will always pay more.
While a saving is welcome news, average energy bills continue to be 10% higher (almost £150) than this time last year, and 65% (almost £700) above winter 2020/21 levels and a third higher (around £450) than pre-Ukraine invasion.
Simon Francis, coordinator of the End Fuel Poverty Coalition, says: 'The Government's u-turn on the Winter Fuel Payment is a clear sign it knows people are struggling with energy bills – but sticking-plaster solutions won't keep people warm next winter or the one after that.
'While bills may fall slightly in July, they're still significantly higher than before the energy crisis and remain tied to the unpredictable cost of fossil fuels. Without urgent reform and real investment, millions will continue to face unaffordable bills and cold homes.
'The Warm Homes Plan offers a long-term fix: lower bills, warmer homes, and greater energy security. But this essential plan is now under threat. If Ministers walk away from it, they are effectively condemning households to years more of hardship.
'Short-term relief must not be used as an excuse for long-term neglect. The Government must fully fund the Warm Homes Plan and deliver the reforms needed to bring down bills for good.'
Before the announcement, consultancy BFY Group predicted that the cap would fall by approximately £1,715 – a £134 decrease from the current April cap. Matt Turner-Tait, Senior Manager at BFY Group, says: 'This shows a decrease of about £134 from the current level of £1,849, set in April.
"This reflects recent declines in wholesale gas and electricity prices and will provide some short-term relief for households on standard variable tariffs. While energy prices typically dip in summer due to reduced demand, market signals indicate that prices could stay at current levels through the winter as well, challenging expectations of the usual seasonal rebound.
"Adjustments to the amount suppliers are allowed to recover for operating costs could reduce bills by up to £15 per year, but these savings could be offset by the rising bad debt among suppliers and other pressures, such as volatile wholesale markets, the rising costs of decarbonisation, inflation-driven operational expenses and regulatory compliance.
More energy customers have been switching to fixed tariffs, which are always cheaper than the Price Cap, and are currently significantly so - by around £250 to £300 for a typical customer.
Matt says: "While the gap between fixed deals and the capped rate may narrow as the Price Cap falls, fixed tariffs are still expected to offer savings in the near term."