How much will my energy bills be and how can I save money?

23 May 2025, 13:31 | Updated: 23 May 2025, 13:43

Ofgem has announced that typical energy bills could drop by 7 per cent a year from July, saving households more than £100 on average.

The regulator announced the reduction on Friday which will kick in as part of its new price cap, starting from July.

This cap sets the limit on how much firms can charge customers per unit of energy and represents a cap on energy unit price plus standing charge but not a cap on total bills.

Nonetheless, it is welcome news for 35 million households who are on a variable rate for their gas and electricity.

Energy secretary Ed Miliband tweeted: “It's great news the energy price cap is going down, but we have more to do.”

In his Standard op-ed, he added: “Every solar panel, every wind turbine and every piece of grid infrastructure we build helps get us off the fossil fuel rollercoaster so we can bring down bills once and for all.

“And as we take back control of our energy supply, the government is determined to do everything we can to support people struggling now. That means fighting for consumers and fixing an energy system that, for too long, frankly just hasn’t worked for them.”

Here is how it could affect you.

Read more: Millions of people to save £129 on bills as energy price cap drops to £1,720 per year

How much will my energy bills be?

The typical bill will drop by £129 to £1,720 per year, a figure that is £660 (28 per cent) lower than at the height of the energy crisis at the start of 2023 when the government implemented the energy price guarantee.

These figures are an average but taking 7 per cent off your bills would probably put you into the right ballpark.

Tim Jarvis, director general of markets at Ofgem, has recognised that prices remain high and are £152 (10 per cent) dearer than they were last year.

He 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.”

How can I save money?

Which? urged households still on a price cap-linked standard tariff to consider moving to a fixed deal.

Natalie Hitchins, Which? home products and services editor, said: “As a rule of thumb, we’d recommend looking for deals cheaper than the price cap, not longer than 12 months and without significant exit fees.

“If you are on a fixed deal which will be more expensive than the July price cap then it’s worth checking your exit fees and considering switching if you are on a deal with no charges to leave early.”

Read also: Energy provider launches solar scheme to save customers £200 a year

Richard Neudegg, director of regulation at Uswitch, said: “There are plenty of fixed deals still available that beat both the current and July energy rates.

“So for households still sitting on a standard tariff linked to the price cap, now is a great moment to lock in fixed savings before the winter gloom returns.”

Mr Jarvis added: “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.”