A new price cap set to take effect in July is expected to bring relief to millions of households by lowering gas and electricity bills. The current cap, which saw annual bills for a typical household rise to £1,849 in April, will be reversed with this new measure. The energy price cap determines the maximum amount customers can be charged per unit of energy, though the actual bill depends on individual energy usage.
The energy price cap covers approximately 22 million households in England, Wales, and Scotland, and is adjusted every three months by Ofgem. This cap sets the maximum price per unit of energy for a standard variable tariff, affecting a typical dual-fuel household paying by direct debit. Analysts predict that from 1 July, the annual bill for such households will decrease to £1,720 compared to the current £1,849.
Individual energy bills vary based on factors such as property type, energy efficiency, occupancy, and weather conditions. The Ofgem cap is calculated based on a “typical household” using specific gas and electricity amounts annually, with bills paid through direct debit. Meter reading submission during a cap change prevents overcharging based on estimated usage rates, with smart meter users exempt from this process.
Prepayment meter households are currently paying slightly less than direct debit customers, with a typical bill of £1,803 between April and June. Around four million households had prepayment meters as of January 2025, with rules introduced in November 2023 regulating their installation process. Customers interested in fixed-price deals, unaffected by the energy price cap fluctuations, should consider their options carefully to ensure the best deal
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