Millions of households across the UK will see some relief on their energy bills this summer, after energy regulator Ofgem announced a 7% cut to the price cap, reducing the average annual bill to £1,720 from July 1.
The £129 drop follows a sharp 6.4% rise in April, which had pushed average annual bills to £1,849. The upcoming reduction reflects a significant fall in wholesale gas prices, which Ofgem said accounted for around 90% of the cut, with the remainder due to changes in supplier operating costs.
The cap, which limits the maximum suppliers can charge per unit of gas and electricity for customers on standard variable tariffs, will apply across England, Wales and Scotland. It does not apply in Northern Ireland, which has its own energy market structure.
The fall in wholesale energy prices has been driven by a mix of geopolitical and seasonal factors, including milder spring weather, and renewed fears over global economic growth following President Trump’s recent tariff announcements.
However, analysts at Cornwall Insight warned that while further falls may follow in the next two quarters, these remain highly contingent on unpredictable variables such as weather patterns, Russia’s war in Ukraine, and global trade tensions.
Despite the price cap reduction, energy bills remain £152 higher than in July 2023, and 52% above pre-crisis levels, according to Citizens Advice. The charity estimates that nearly seven million people in the UK are behind on their energy bills, and has renewed its call for the government to introduce targeted support and home energy efficiency upgrades.
“This drop in energy prices will ease the burden for some households, but bills are still significantly higher than before the crisis,” said Dame Clare Moriarty, Chief Executive of Citizens Advice.
“The government must provide more targeted bill support and invest in upgrading five million homes with energy-saving measures.”
Tim Jarvis, Ofgem’s Director General of Markets, welcomed the reduction but acknowledged that many households continue to struggle.
“A fall in the price cap will be welcome news for consumers and reflects a reduction in the international price of wholesale gas,” he said. “However, we’re acutely aware that prices remain high.
“You don’t have to pay the price cap — better deals are out there. Shop around, talk to your supplier, and consider switching to direct debit or smart pay-as-you-go, which could save up to £136 a year.”
According to Ofgem, 35% of households are now on fixed tariffs, up from 15% last year, as more competitive deals return to the market. Consumer groups and price comparison services are encouraging households to compare tariffs and lock in savings while prices are falling.
Amid record levels of energy debt, suppliers are pressing the government to introduce a “social tariff” to protect the most financially vulnerable. Jarvis confirmed that Ofgem is “doing everything we can to support consumers today”, including developing reforms to standing charges and exploring new ways to help households trapped in debt.
“We are pushing ahead with more changes to help consumers this winter,” he said.
Introduced in 2019, the energy price cap is reviewed quarterly and is designed to protect consumers who don’t regularly switch suppliers from being overcharged on standard variable tariffs. While it has shielded many from price gouging, critics argue that more targeted support for low-income households is urgently needed to address the long-term affordability crisis.
As energy prices show tentative signs of easing, the pressure is now on both the government and regulator to ensure support reaches those most in need — and to future-proof the energy market for what could still be a volatile winter ahead.
