Will gas and electricity bills fall? 2025 energy price forecast
UK energy prices dropped by 7% on 1 July after the latest price cap came into effect, reducing bills for those on a variable rate tariff. Will bills rise or fall in the Autumn?
Energy bills have dropped by 7% – 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 a year from 1 July, which runs until the end of September. It marks a sizeable drop compared to the previous cap of £1,849 that was in place between April and June.
It should help reduce the electricity bills of households using fans and air-conditioning during the current heatwave and as we head further into summer, not to mention lowering the cost of keeping the freezer stocked with ice lollies.
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The price cap is set on a quarterly basis by the energy regulator. About 21 million households on variable tariffs will see their bills drop from 1 July. Those on a fixed energy deal will not be impacted by changes to the cap.
The price cap figure refers to the typical annual bill for a household paying by direct debit. Those who use more energy will pay more, as the price cap is based on the maximum unit price, not your total bill.
Will energy bills fall further this year?
The latest price cap forecast from consultancy Cornwall Insight, known for the accuracy of its predictions, suggests prices could stay roughly the same in the autumn. In figures published on 21 May, it said it expects bills to rise by just 0.4% in October.
However, in an updated prediction issued on 1 July, it said prices would drop by 1%, bringing it down to £1,698 a year for a typical dual-fuel customer. This would make it £22 lower than the £1,720 current cap.
But, this is likely to be revised again. The consultancy explains that although its current forecast “offers some relief to households, there remains significant uncertainty with just under two months until the final figure is announced”.
It adds: “Over the past few weeks, international tensions in the Middle East saw wholesale energy prices rise, with our price cap forecast reaching a peak of £1,777 on 19 June. As the military tension has eased, the wholesale market has fallen – a fact which, coupled with updates to our forecasts of non-wholesale costs, is reflected in our latest outlook for the 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,” he comments.
E.ON Next is forecasting an October to December price cap of £1,712, representing an £8 drop on the July to September cap. However, this will likely change over the coming months.
In terms of energy prices in 2026, E.ON Next is predicting another small drop to £1,702 for the January to March price cap.
Cornwall Insight is expecting a further small fall in January, with prices rising slightly in April. “However, market volatility, geopolitical risks, and potential changes – and additions – to non-wholesale cost parts of bills mean forecasts remain subject to change,” it says.
On 1 July, Ofgem chief executive Jonathan Brearley told the BBC that the UK needed to "get away from this rollercoaster of international gas prices".
The regulator has given provisional approval to a £24 billion investment to upgrade UK energy infrastructure, which Brearley said would "build a different energy system that is much more stable".
However, customers will need to pay for the upgrade. Ofgem said household bills would rise by £104 by 2031 to cover the cost, although it added bills would be even higher without the investment.
What do falling energy prices mean for you?
It isn’t energy bills that are capped, but unit costs and standing charges. Households that use more gas and/or electricity could end up paying significantly more than the £1,720 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.
Swipe to scroll horizontally
Row 0 - Cell 0
January price cap
April price cap
July price cap
October price cap forecast
Electricity unit cost (per kWh)
24.86p
27.03p
25.73p
26.17p
Electricity standing charge (daily)
60.97p
53.80p
51.37p
51p
Gas unit cost (per kWh)
6.34p
6.99p
6.33p
6.02p
Gas standing charge (daily)
31.65p
32.67p
29.82p
30p
Typical annual household bill
£1,738
£1,849
£1,720
£1,697.55
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 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 to come in slightly lower, at £1,698 a year. This should come as a relief to households, should it materialise.
However, October’s price cap won’t be announced until 27 August, so plenty could change between now and then.
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.
Some high energy users, including those who rely on medical equipment, could also suffer if these costs were added to the unit rate for everyone.
Critics also argue that standing charges won’t become more affordable, they will simply be shifted to another part of the energy bill.
What conflict in the Middle East means for energy prices
Questions over the future of energy prices have been raised following Israel’s strikes on Iran’s nuclear facilities on 13 June after they prompted the price of Brent crude oil to spike.
A rise in the oil price has implications for the price of energy – there was a similar jump when Russia first invaded Ukraine in 2022, though it was much more pronounced.
In the days since Israel’s initial strike, the price of a barrel of oil has been volatile. It saw a further jump after the United States bombed Iran’s nuclear facilities on 21 June – the price of Brent peaked at around $81 a barrel in the immediate aftermath.
With the US becoming involved in Israel’s conflict with Iran, markets became worried that the overall supply of oil could become restricted, especially if Iran closed the Strait of Hormuz, a passage between Iran and Oman that about a fifth of the world’s oil travels through.
Markets seem to be more convinced that the conflict will deescalate as the price of a barrel of oil has eased to around $67 at time of writing, around the same as it was before Israel’s initial strike on Iran.
Victoria Scholar, head of investment at Interactive Investor, said global oil supplies “are as of yet unaffected by the conflict, which goes some way to explain why oil prices have proven relatively resilient so far.”
However, Scholar warns “there’s nervousness about the possibility that Iran could retaliate by closing the Strait of Hormuz,” which could prompt a major spike in oil prices.
On 22 June, Iran’s parliament endorsed a measure to close the strait, though the decision whether to do this will lie with Iran’s senior officials.
If the strait is closed, “it could have dangerous consequences for international trade, economic growth and inflation,” according to Scholar, and could potentially lead to an increase in the cost of energy.
This being said, Iran has not moved to restrict the Strait of Hormuz, and it is unclear whether the country will pursue this option.
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 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. 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’s advice is to “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”
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.
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Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.
She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times.
A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service.
Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.
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