Will gas and electricity bills fall? Energy price forecast

Energy bills rose by 2% on 1 October when the new Ofgem energy price cap came into effect.

The current cap means the average annual price of energy for a typical dual-fuel household consuming the average amount of energy and paying by direct debit is £1,755 a year for the period between 1 October and 31 December.

This is a hike of around £35 per year when compared to the previous July to September price cap of £1,720.

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The price cap is set on a quarterly basis by the energy regulator and around 20 million households are on variable energy tariffs that move with changes to the price cap. Those on a fixed energy deal instead lock in at a certain price for a fixed amount of time.

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 broadly agree that energy prices will fall from October’s level when the new price cap comes into effect on 1 January 2026, but predictions vary over how much prices will fall.

Energy consultancy Cornwall Insight, which is well-regarded for the accuracy of its price cap predictions, expects energy bills to fall to £1,724.78 per year in the first quarter of 2025, £30 lower than the current price cap.

This prediction, made on 30 September, includes the introduction of the Regulated Asset Base (RAB) which is designed to raise money to support investment in new nuclear power stations by spreading the costs of construction and operation across consumer bills. The RAB makes up around £9.45 of their January price cap prediction.

Dr Craig Lowrey, principal consultant at Cornwall Insight, said: "A dip in bills this January might come as a relief for households, but we shouldn’t mistake this as the start of a trend toward cheaper energy.

“The reduction we are forecasting is being driven by relatively small shifts in the wholesale market. At the same time, new charges like those to support nuclear development are starting to appear on bills, and that’s a sign of things to come.”

Other forecasters expect a much more modest fall. EDF Energy predicts the January price cap will fall just £8 to £1,747 per year with low certainty.

Meanwhile, British Gas expects the price cap will fall by just £5 to £1,750 per year in January, again with low certainty.

Looking further into the new year, predictions are again broadly in alignment that energy bills will increase in the second quarter of 2026.

Though Cornwall Insight has not given a concrete number for what they expect the price cap will be, Lowrey said: “Any fall in January would represent a pause rather than a permanent drop. By spring, costs are expected to rise again as network charges and policy costs increase. It’s a reminder that while wholesale prices may be softening, the costs of running and upgrading Britain’s energy system are moving in the opposite direction.”

EDF predicts the price cap will rise in April and then fall in July.

Source: EDF, accurate as of 29 September

Forecasts by British Gas anticipate a similar trend, though with slightly higher prices.

Source: British Gas, accurate as of 29 September

Remember, you should take these predictions with a pinch of salt as it is incredibly difficult to accurately predict future prices in a market as volatile as energy.

What do rising energy prices mean for you?

As the energy price cap rose on 1 October, households on a variable tariff will find they are paying slightly more for their energy than they did between July and September.

While Ofgem estimates the average annual bill for the last quarter of 2025 is £1,755, some households will pay more than this and some will pay less.

This is because unit costs and standing charges are capped, not energy bills. Households that use more gas and/or electricity could end up paying significantly more while ones that restrict their energy usage will pay less.

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 (January forecast). Typical annual bill based on customers paying by direct debit. Latest Cornwall Insight predictions as of 30 September

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.

Whether you should fix your energy or not 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 the new year. If prices 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.

For more information on whether or not you should fix your energy bills, read our article on if you should switch to a fixed energy tariff.

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.

Additionally, some government schemes give some households money towards paying their energy bills.

The Warm Home Discount is offered to households in receipt of some means-tested benefits who use participating energy suppliers and provides £150 of credit that is automatically paid towards your energy bill.

Meanwhile, if you are a pensioner with an income less than £35,000 you will be eligible for the Winter Fuel Payment, which provides retirees with up to £300 each winter.

What’s happening with standing charges?

The current standing charge regime is set to be shaken up by Ofgem after consumers criticised the current system as being unfair.

Under new plans from the energy regulator, households are set to be given the choice to pay lower standing charges, but at the cost of higher unit costs.

Every major energy firm will be required to offer their customers this choice by the end of January 2026 – but Ofgem has warned that energy bills are unlikely to fall. Instead, fees will simply be moved from one part of the bill to another.

Whether you should switch to the new tariff with lower standing charges in January 2026 depends on your own personal circumstances. Ofgem recommended households should “consider their circumstances and seek advice from their supplier or consumer groups” to see if switching to a new tariff is best for them.

While some consumers may find this new option helpful, the results of the consultation have come as a blow to bill payers who want to see more significant reform to how energy bills are paid.

Other organisations, such as trade body Energy UK, have also argued that this reform will simply serve to further complicate standing charges for consumers.