Will gas and electricity bills fall? 2025 energy prices forecast

Energy bills could tumble later this year in welcome news for consumers in the UK.

Alongside geopolitical turmoil caused by Donald Trump’s tariffs factor, the recent decline in wholesale gas and electricity prices has also been driven by above-average temperatures reducing demand and easing pressure on short-term prices.

The result of this is that your energy bills could be cheaper this summer.

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Energy bills rose by 6.4% on 1 April, due to the latest energy price cap coming into effect.

Ofgem’s price cap hiked the typical dual fuel bill to £1,849 per year, an annual increase of £111, although the exact price you pay will depend on your usage. The price cap is reviewed quarterly, meaning this covers April to June.

The rise follows a 1.2% increase in January and a 10% hike in October 2024. The higher energy bills will be particularly felt by many pensioners after losing their Winter Fuel Payment last year.

The Ofgem price cap applies to about 26 million households who are on a variable energy tariff. It is updated every three months by the energy regulator.

Some customers opt for fixed energy deals in an attempt to shield themselves from price hikes, but taking one out could be a risk depending on what happens to the price cap in 2025.

Meanwhile, households are also dealing with a number of “Awful April” price hikes, ranging from council tax and water bills to broadband.

However, there could be some reprieve this summer as the latest energy price predictions suggest bills will drop in July. We look at the latest energy price forecasts about where bills are headed this year.

Will energy prices go down in 2025?

Energy consultancy Cornwall Insight, which is well regarded for its accurate forecasts, has predicted that energy bills will tumble when the new price cap is announced for July to September.

On 25 April, the consultancy announced it predicts that a typical consumer’s dual fuel tariff will fall to £1,683 a year from July onwards, representing an almost 9% drop in prices from the current price cap.

This would mean that the average customer could pay £166 less per year for their household fuel for the period.

It would mean electricity could cost 25.01p/kWh with a 54p standing charge a day, while gas could cost 6.01p/kWh with a 33p standing charge.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: "While a fall in bills will always be welcomed by households, we mustn’t get ahead of ourselves. We have all seen markets go up as fast as they go down, and the very fact the market dropped so quickly shows how vulnerable it is to geopolitical and market shifts.”

Cornwall Insight’s latest prediction comes in lower than their previous calculations published last month.

At the end of March, the consultancy said they expected the yearly price of energy to drop by 7%, while in February they predicted just a 5% fall.

The reason that Cornwall’s predictions have been revised each month is that, as we get closer to the time where the new price cap is announced, better data is available and therefore more accurate predictions are able to be made.

If the energy price cap is revised down, it will mark the first time in a year as energy prices are currently on their third consecutive hike.

Ofgem will announce the July price cap on 27 May.

Cornwall Insight cites a combination of the geopolitical implications for the reason that they now predict energy prices to fall next quarter.

Lowrey said: “It would be easy to conclude the fall in the market was due to the United States tariffs, but the reality is that the interactions within and across the energy market are complex – from energy storage requirements in Europe, to warmer weather, to global trade issues – and contribute to the volatility we have seen in recent weeks.”

He also warned that, while a fall in the price cap would be welcome news for consumers, “there is unfortunately no guarantee that any fall in prices will be sustained, and there is always the risk of the market rebounding”.

In order to combat this, Lowrey advocated for a continued focus on growing low carbon energy infrastructure in the UK and ensuring that energy generation is more secure and more sustainable.

“The only real way to protect households from this constant cycle of instability and insecurity is to reduce our dependence on international wholesale markets,” he said.

Meanwhile, EDF Energy is predicting a July price cap of £1,714 a year, which stands above Cornwall’s prediction by £31.

On 23 April the energy supplier said: “We’re forecasting a modest increase for the cap's July to September period, this follows previous declines in wholesale gas and electricity prices, driven by concerns over the impact of global tariffs.

“While prices rebounded last week, they remain below the levels seen three weeks ago, prior to the tariff announcement. There's still potential for significant change in wholesale prices during the indexation period for the Q3 2025 cap.”

Looking further ahead, EDF is predicting that the October price cap will drop slightly to £1,708, and then rise a tiny bit to £1,716. However, these are long-range forecasts and a lot could happen between now and then to affect wholesale energy prices.

Energy bills could also change this year depending on whether Ofgem introduces new rules on standing charges. The regulator recently conducted a consultation on plans to force energy firms to offer tariffs that have zero standing charge.

Meanwhile, the government launched Great British Energy last summer in an attempt to reduce the UK’s reliance on other countries for its energy supply. But it could be a long time before consumers see the effects of this on their bills, if indeed the project is a success.

What is the long-term outlook for energy prices?

Cornwall Insight says it could be several years before energy bills go back to where they were before 2020.

It predicts that prices will remain relatively flat over the next three years, before beginning to drop away from 2028. By then, it expects improved gas supplies to be better supported by bolstered renewable energy output.

A possible end to the war in Ukraine will also help alleviate some price pressures on energy, according to the consultancy.

However, it says wholesale prices are likely to remain well above averages seen from the last decade, even by 2031.

Once inflation is taken into account, they could still be more than 10% above the most expensive energy prices from the late 2010s.

Cornwall Insight puts this down to a continued European reliance on gas imports.

What’s happening with standing charges?

Ofgem is proposing to force energy firms to make a dual pricing offer – with, or without, a standing charge – to give customers greater choice and reduce energy bills for some households.

Many billpayers consider standing charges to be unfair as they have no control over how much is charged. It prompted a review by the energy regulator last year, and when it asked for the public's views, it received a massive response of 30,000 submissions.

Ofgem’s consultation looked at a system of two tariffs, where the one without a standing charge would have a higher price for each unit of energy. Both would fall under the existing price cap system.

However, the plans have been criticised by some charities and energy groups for their complexity; they say vulnerable customers could unwittingly make the wrong choice, meaning they pay more for their gas and electricity. They 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?

Fixed energy deals have become increasingly competitive compared to the Ofgem energy price cap. At the moment, the way to approach the market depends on your attitude to risk.

Fixing now risks locking in rates that could become uncompetitive if prices drop in July and October. But, if prices continue to 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. So, MoneyWeek suggests weighing up the options on the market and assessing whether fixing meets your financial needs.

Check out Should you switch to a fixed energy tariff? for the latest guidance and deals.

What are the current energy prices?

The current Ofgem energy price cap, which runs from 1 April to 30 June 2025, dictates the unit price that suppliers can charge to customers on a variable tariff.

It is set at £1,849 a year for a typical household that uses electricity and gas and pays by Direct Debit. This is a rise of 6.4% compared to the cap that covered 1 January to 31 March 2025 (£1,738).

This annual bill reflects the average use for a typical customer. So, if you use more gas and/or electricity, perhaps because your home is bigger than average or you have high-energy appliances, your bill will be higher than this.

Here are the average unit rates per kilowatt hour (kWh) and daily standing charges (these vary by region) under the current price cap, for Direct Debit bill-payers:

• Gas: unit rate – 6.99p per kWh, standing charge – 32.67p per day
• Electricity: unit rate – 27.03p per kWh, standing charge – 53.80p per day

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 vs electric heaters, heated airers vs tumble dryers, and wood burning stoves vs central heating.

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 a big debt.

Your energy supplier may offer support. Some suppliers have hardship grants. For example, 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’ll pay fixed amounts over a set period of time, which will cover what you owe plus an amount for your current use.

If you’re 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.

Ofgem’s energy price cap history

Here are the historical price changes to Ofgem’s energy price cap, so you can see how energy bills have increased and decreased over the past few years.

Source: Energyhelpline. *This was replaced by the £2,500 Energy Price Guarantee