Will gas and electricity bills fall? 2025 energy price forecast

Energy bills will rise by 2% on 1 October when the new Ofgem energy price cap comes into effect.

The new 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 will be £1,755 a year for the period between 1 October and 31 December.

This is a hike of around £35 when compared to the current price cap of £1,720 per year between 1 June and 30 September.

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The price cap is set on a quarterly basis by the energy regulator. About 20 million households on variable tariffs will see their bills rise on 1 October. 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 broadly on the same page with their early predictions of where the price of energy will go when the price cap for the first quarter of 2026 is announced.

Energy consultancy Cornwall Insight, which is well-regarded for the accuracy of its price cap predictions, expects energy bills to fall to around £1,712.20 per year in the first quarter of 2026. If this forecast turns out to be accurate, that would constitute a fall of around 2.4%.

This prediction, made on 27 August, 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: “There is better news on the horizon with bills currently expected to ease in January, driven by a forecast fall in wholesale prices.

“Normally, that drop would have meant even lower bills, however, rising policy costs, such as funding for new nuclear projects are keeping bills a little higher.”

He added: “Nuclear will be one of the cornerstones of a more secure and sustainable energy system, yet some of the funding will ultimately need to come from billpayers. This is a difficult trade off – after all, everyone wants to see bills come down. However, the challenge we face is clear: if we want to build a resilient, low-carbon energy future, we must be prepared to invest in it today.”

Cornwall Insight is not the only forecaster that expects the price cap to drop in the first quarter of 2026. EDF Energy also predicts the price cap will fall very slightly in January to £1,750, down by 0.28% from October’s price cap, with ‘low’ certainty.

British Gas is forecasting that bills will rise modestly in January. They expect the price cap to be £1,760 in Q1 2026, up 0.28% from Q4 2025, with ‘low’ certainty.

Looking further ahead, there is more division among forecasters over whether prices will rise or fall.

British Gas expects the price cap will rise drastically in April, going up £135 to £1,895 per year.

As 2026 progresses, it is widely expected that the price cap will continue to fluctuate, as shown in the table below.

Source: British Gas, accurate as of 25 September

Meanwhile, EDF expects energy bills to rise by £123 to £1,873 in April.

Their predictions for the rest of the year can be found below.

Source: EDF, accurate as of 25 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 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 or £1,755 per year under the October 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 (January forecast). Typical annual bill based on customers paying by direct debit. Latest Cornwall Insight predictions as of 27 August

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.