UK energy bills will drop in July, offering some relief to millions of households. However, energy regulator Ofgem is urging consumers to shop around, as fixed deals may offer even greater savings.
From July to September 2025, the energy price cap will fall, reducing the typical dual-fuel bill by £129 a year. This equals a saving of around £11 a month, based on average usage. The new average annual bill for direct debit customers will be £1,720, down from £1,849.
The fall is due to a drop in wholesale gas prices, according to Ofgem. Yet, prices remain higher than a year ago and significantly above pre-2020 levels.
Tim Jarvis, Ofgem’s Director General of Markets, encouraged customers to compare deals:
“You don’t have to pay the price cap. Better deals are out there. Speak to your supplier and shop around.”
Around 35% of billpayers are now on fixed tariffs, up from 15% last year, when fewer options were available. Ofgem estimates that switching could save households up to £200 annually.
Despite the fall, standing charges—fees for being connected to the energy supply—remain a major concern. These will fall slightly in July, but debate continues about how they are structured.
Here’s what changes in July:
- Gas capped at 6.33p per kWh (down from 6.99p)
- Electricity capped at 25.73p per kWh (down from 27.03p)
- Standing charges: 51.37p/day for electricity and 29.82p/day for gas
- Prepayment meter users will pay £1,672/year on average
- Cash/cheque payers will pay £1,855/year
The price cap affects 21 million households in England, Wales, and Scotland. It does not apply in Northern Ireland, which has a separate energy market.
While prices will be lower in July, energy use tends to drop in summer. Households may not feel the full impact until colder months.
Citizens Advice said the fall offers “cold comfort” for many. Dame Clare Moriarty urged the government to provide targeted support, especially for families and those in debt.
Household energy debt stands at nearly £4 billion, due to years of high prices. The charity also called for the government to upgrade five million homes with energy efficiency measures.
Adding to the policy tension, Prime Minister Sir Keir Starmer recently hinted at reversing cuts to winter fuel payments. Over 10 million pensioners were affected when the top-up became means-tested last year.
Meanwhile, UK retail sales rose 1.2% in April, marking the fourth consecutive monthly gain. Warmer weather encouraged spending on food and household items.
Though energy prices are easing, households should remain cautious. Ofgem advises checking fixed deals now to lock in better value ahead of potential winter volatility.
