Will gas and electricity bills fall? 2025 energy prices forecast

Energy bills could tumble this year as a result of market volatility triggered by President Trump’s tariffs.

Oil and gas prices have fallen over the past week, which should lead to lower prices at the petrol pump, and possible cheaper energy bills this summer.

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

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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.

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.

These forecasts were made at the end of March, before Trump’s tariffs came into effect. The Ofgem price cap could come in lower still, as oil and gas prices have fallen as a result of weaker economic activity and less world trade cutting demand for energy.

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

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.

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, predicts that bills will fall in the third quarter of the year.

At the end of March, the consultancy suggested the average yearly price of energy will drop to £1,712 from July, representing a 7% drop on April’s £1,849 cap.

This is slightly lower than the prediction it made in February, when it said bills would reduce to £1,756 from July, down by around 5%.

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 says a combination of a potential ceasefire between Russia and Ukraine, warmer weather and lower gas demand from Asia have recently led to energy prices falling.

Dr Craig Lowrey, principal consultant at Cornwall Insight, comments: "The latest forecast drop in the July price cap will bring some relief to households and the government, offering a welcome sign that energy prices are moving in the right direction.”

He tells MoneyWeek that “the last week has seen continued volatility in the wholesale market as traders have sought to assess the potential long-term impacts of tariffs on economic activity, international trade and energy markets alike”.

According to Lowrey, it is too soon to say whether Trump’s tariffs will impact UK energy bills, but that “any material enduring fall in the wholesale market should ultimately be reflected in bills – as would any corresponding sustained increase”.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, says gas prices have fallen to “levels not seen for six months”, due to “expectations about the hit to global energy demand as Trump’s tariffs threaten to wreak havoc on the global economy”.

She adds: “If downwards pressure on prices continues, it will likely help bring down the energy price cap. However, the cap is based on the average wholesale prices of energy in the three months leading up to the review period.

“If more negotiations take place with other countries and tariff reprieves are granted, we could see prices shift upwards. However, it’s still looking likely that the cap will come down given that Trump seems determined to thwart Chinese manufacturers in particular from selling so many goods in the US.

“So, it seems likely global growth will be affected, given this is a trade war which has erupted between the world’s two largest economies, and that will continue to affect energy demand.’’

Looking further ahead, Cornwall Insight forecasts that the October to December price cap will rise slightly compared to the July cap, before falling again in January 2026.

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