The drop of 7 per cent will see annual energy bills go down from £1,849 to £1,720 on July 1.
Ofgem has announced household energy bills will fall by seven per cent this summer. The industry regulator confirmed on Friday morning annual energy bills for millions of households on the standard tariff – with typical average usage – will drop from £1,849 to £1,720 from July 1 – a reduction of £129 over the coming year (£10.75 per month).
Ofgem changes the price cap for households every three months by setting a maximum price energy companies can charge people in Scotland, England and Wales for each unit of energy they use.
However, it’s crucial to remember the price cap does not limit a household’s total energy bills – people still pay for each unit of gas and electricity they use which means the more energy you use, the higher the bill, similarly, the less you use, the lower the costs.
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Standing charges from April 1
Electricity rates
- If you are on a standard variable tariff (default tariff) and pay for your electricity by Direct Debit, you will pay on average 25.73 pence per kilowatt hour (kWh). The daily standing charge is 51.37 pence per day. This is based on the average across England, Scotland and Wales and includes VAT.
Gas rates
- If you are on a standard variable tariff (default tariff) and pay for your gas by Direct Debit, you will pay on average 6.33 pence per kilowatt hour (kWh). The daily standing charge is 29.82 pence per day. This is based on the average across England, Scotland and Wales and includes VAT.
The fall is being attributed to US President Donald Trump’s aggressive tariff plans which led to a significant slump in gas and oil prices.
Cornwall Insight said it expects the reduced price cap to be followed by a “modest drop” in October and another similar dip in January next year.
News of a fall in energy costs will come as a relief for households, who suffered through an “awful April” of bill rises, including Ofgem’s last 6.4 per cent price cap increase.
Under-pressure households have also been hit by steep increases across bills for Council Tax, mobile and broadband tariffs, as well as road tax. Bill rises have led to Consumer Prices Index (CPI) inflation jumping to 3.5 per cent in April, up from 2.6 per cent in March and the highest since January 2024.
Tim Jarvis, director general of markets at Ofgem, said: “A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy.
“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you. And changing your payment method to direct debit or smart pay as you go can save you up to £136.
“In the longer term, we need an energy system where prices are insulated from the volatile international gas market, and which ensures more stable prices and energy security. And we’re working closely with government to get the investment we need to reach our clean power and net zero targets as quickly as possible.
“We’re also doing everything we can to support consumers today and pushing ahead with more changes to help consumers. This includes working on ways to support those trapped in energy debt and bringing in reforms to standing charge tariffs for this winter.”
Responding to the announcement of the new cap, Citizens Advice Scotland Chief Executive Derek Mitchell said: “Any reduction in the cap will come as welcome news to households across Scotland, but we have to remember the context that this is a small fall from an extremely high level. Bills are going to remain unaffordable for many households, putting continued pressure on people’s finances and wellbeing. Prices continue to fluctuate and there’s no guarantee that the cap won’t be increased again next quarter, reversing any positive impact here.
“Our energy market is broken, and thousands of people are facing mounting energy debt. People like Elaine, who visited her CAB for bankruptcy advice after struggling to pay for energy and other essential bills for 3 years and accruing £32,000 of debt, including £5,000 of energy debt. The financial and emotional stress of living with debt takes a serious toll on Elaine and so many others struggling with debt.
“We need to see long-term solutions that will enable all of us to heat our homes in a way that’s affordable. We have called for a new social tariff to be applied to bills for low-income households, and for a robust energy debt write-off scheme to help those people who were forced into debt just to pay their bills. We need to see urgent action on this.”
The Scottish CAB network gave energy advice to almost 9,900 people in the first three months of 2025. The average energy debt is £2,500 across Scotland and £3,100 in rural areas. If you need help with energy bills , full details can be found on the website here.
Craig Lowrey, principal consultant at Cornwall Insight, said: “The fall in the price cap is a welcome development and will bring much-needed breathing space for households after a prolonged period of high energy costs.
“It’s a step in the right direction, but it should be taken in context.
“Prices are falling, but not by enough for the numerous households struggling under the weight of a cost-of-living crisis, and bills remain well above the levels seen at the start of the decade.
“As such, there remains a risk that energy will remain unaffordable for many.”