Will gas and electricity bills fall? 2025 energy price forecast

Energy bills dropped by 7% on 1 July – about £11 a month for a typical customer – in welcome news for millions of UK households.

The Ofgem energy price cap has been set at £1,720 per year and will remain at this level between 1 July and 31 August.

This means the typical dual-fuel household, consuming an average amount of energy and paying by direct debit will pay around £1,720 a year for their energy. This is a significant drop compared to the previous cap of £1,849 that was in place between April and June.

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A fall in the price cap should help reduce the electricity bills of households this summer – although if you use more energy, you will pay more.

The price cap is set on a quarterly basis by the energy regulator. About 21 million households on variable tariffs will have seen their bills drop since 1 July. Those on a fixed energy deal will not be impacted by changes to the cap.

As the price cap figure refers to the typical annual bill for a household paying by direct debit, you may pay more or less, depending on your energy consumption.

Will energy bills fall further this year?

Forecasters are divided over whether or not they expect energy bills to fall in the coming quarters.

The latest price cap forecast from consultancy Cornwall Insight, known for the accuracy of its predictions, on 1 July suggested the price cap will drop by 1% for the final quarter of the year. .

This would bring the average annual energy bill to £1,698 a year for a typical dual-fuel customer – £22 lower than the £1,720 current cap.

Dr Craig Lowrey, principal consultant at Cornwall Insight, points out that households are still paying far more for their energy than they were before the pandemic, with the current outlook showing little prospect of a meaningful drop over the next few years.

“Our reliance on international energy markets means that while we have a range of supply sources, this brings with it a vulnerability to global events and price shocks – something that was evident in June [when conflict in the Middle East made the price of oil volatile],” he comments.

However, while Cornwall Insight expects prices to fall next quarter, other forecasters believe prices will increase in the next few quarters.

Predictions from EDF suggest that the price cap will rise by 1.7% between October and December to £1,750, while British Gas expects the price cap to increase by 2.6% to £1,765 in the same time period.

Both firms said their level of confidence for the prediction was “low” when they made them on 5 August and 4 August, respectively. The price cap for October to December will be announced by Ofgem by 27 August.

Looking further into the future, EDF expects energy bills to keep increasing into 2026, though it is incredibly difficult to predict where prices will go so far in advance.

Source: EDF

A similar upwards movement in the price cap is also predicted by British Gas in 2026.

Source: British Gas

What do falling energy prices mean for you?

Unit costs and standing charges are capped, rather than energy bills. Households that use more gas and/or electricity could end up paying significantly more than the £1,720 per year figure under the current price cap.

The below table summarises how unit costs and standing charges have changed over the course of this year. It also includes the latest forecast from Cornwall Insight for October.

^{Source: Ofgem (confirmed figures) and Cornwall Insight (October forecast). Typical annual bill based on customers paying by direct debit. Latest Cornwall Insight predictions as of 1 July}

Lowrey at Cornwall Insight points out that lower prices in the warmer months are helpful, but become even more valuable as the weather starts to cool and the heating goes on.

At the moment, the October to December price cap is forecast by Cornwall Insight to come in slightly lower, at £1,698 a year. If this were to happen, it would come as a relief to households as they turn their heating back on.

However, as many other forecasters are expecting a small rise in the price of energy next quarter, consumers should not hold their breath.

October’s price cap will be announced by 27 August, so there is plenty of time for the market and forecasts to change.

What’s happening with standing charges?

Ofgem is looking to change the way standing charges work, which could mean energy firms are forced to make a dual-pricing offer.

If the proposal is implemented, every energy supplier will need to offer energy tariffs with low or no standing charges. This would give customers greater choice and could reduce energy bills for some households.

Many billpayers consider standing charges to be unfair as they have no control over how much is charged.

In a consultation conducted earlier this year, Ofgem looked at a system of two tariffs – one with a standing charge and one without. The one without a standing charge would have a higher price for each unit of energy. Both tariffs would fall under the existing price cap system.

The consultation closed in March and a decision has not yet been announced.

The plans have been criticised by some charities and energy groups for their complexity. They say vulnerable customers could make the wrong choice, unwittingly paying more for their gas and electricity.

Critics also argue that standing charges won’t become more affordable, they will simply be shifted to another part of the energy bill.

Should I fix my energy?

Some fixed energy deals look competitive compared to the Ofgem energy price cap. The regulator is urging people to consider fixed-price deals, which could potentially save them hundreds of pounds a year.

A lot depends on where prices are heading next and your attitude to risk.

Fixing now risks locking in rates that could become uncompetitive if prices drop in October and beyond. If prices instead rise, you could have saved money by fixing.

If you value cost certainty, opting for a fixed deal means you will know exactly what your outgoings will be for the next 12 months. MoneyWeek suggests weighing up the options on the market and assessing whether fixing meets your financial needs.

If you opt for a fixed deal, pay close attention to any exit charges that come with leaving the tariff early.

“Some providers offer deals with no exit fees, particularly for existing customers, so if prices do fall at a later date, they aren’t trapped,” said Alice Haine, personal finance analyst at investment platform Bestinvest. These tariffs can sometimes be more expensive, though.

Haine suggests billpayers “consider all options, including cheaper variable tariffs, a tracker product that changes daily based on wholesale cost, or time-of-use tariffs that can benefit people charging electric vehicles overnight or those that want to take better advantage of off-peak rates”.

How to keep energy bills low

To help you keep energy bills low, we have gathered some top tips in our article looking at 14 ways to reduce your energy costs.

If you're interested in the best ways to improve your energy efficiency and reduce costs, we explore radiators versus electric heaters, heated airers versus tumble dryers, and wood burning stoves versus central heating in separate articles.

How to get help with paying your energy bills

If you’re struggling to afford your energy bills, don’t bury your head in the sand and build up large debts.

Your energy supplier may offer support, for example, some suppliers have hardship grants. Octopus Energy has Octo Assist and British Gas has the British Gas Energy Trust.

You may be able to get a repayment holiday. This is where you ask your supplier to pause your repayments for a short amount of time to give you some breathing space.

Another option is to agree to an affordable payment plan. You will pay fixed amounts over a set period of time, which will cover what you owe plus an amount for your current use.

If you are on benefits, you might be able to repay your debt directly from your benefits through the Fuel Direct Scheme.

According to Citizens Advice, the Fuel Direct Scheme can be a good option if you can’t agree on a plan to pay back your debt, and it’s usually better than getting a prepayment meter.