London Daily

Focus on the big picture.
Thursday, Jul 10, 2025

Ofgem energy price cap falls - but average household bills still expected to rise

Ofgem energy price cap falls - but average household bills still expected to rise

Implementing a social tariff, which offers lower energy prices for vulnerable customers, should be urgently examined, Ofgem said - as it warned prices are unlikely to fall to pre-energy crisis levels.
The energy regulator has reduced the cap on the amount energy companies can charge customers but bills are still expected to increase.

Ofgem has today announced the cap on the amount typical households pay on electricity and gas bills will drop to £3,280 from 1 April.

It's a decrease from the previous cap of £4,279 effective from the beginning of January to the end of March and reflects the fall in wholesale energy prices.

The price cap sets a maximum amount suppliers can charge per unit of energy and is regularly reviewed by Ofgem.

The amount is not the maximum that can be charged - customers using a lot of energy will have higher bills - but instead reflects typical usage levels.

Households had been protected from the previous high price cap due to the government's energy price guarantee (EPG) which capped the energy unit price resulting in an average household bill of £2,500.

But bills are now likely to rise as the EPG threshold will increase to £3,000 for an average household from 1 April. Even with the £500 reduction in the price cap, the scheme will cost an estimated £26.8bn.

As a result, the average home can likely expect bills to rise by an estimated 20%, an increase of £500 a year, according to energy consultancy Cornwall Insights as households absorb the gap between Ofgem's price cap and the EPG.

Prices are to rise even further when the end of the £400 energy rebate scheme is factored in, Dr Craig Lowrey, the principal consultant at Cornwall Insight, said.

"Regrettably the forecast for April looks set to leave the price cap above the increased energy price guarantee level.

"While tumbling cap projections are a positive, unfortunately, already stretched households will be seeing little benefit before July."

Under the rebate scheme, six instalments of about £66 were paid monthly to bill payers from October.

Commenting on the high bills, the Ofgem chief executive said, a social tariff which offers lower energy prices for vulnerable customers should be urgently examined.

"A very tough time for many households across Britain"

"Where people are struggling, we urge them to contact their supplier to make sure they are getting all the help and support they are entitled to," Jonathan Brearley said.

"We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations."

There is some good news ahead, Mr Brearley suggested, but prices are still not going to fall to the levels seen in the last 18 months.

"Today's announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won't make an immediate difference to consumers, it's a sign that some of the immense pressure we've seen in the energy markets over the last 18 months may be starting to ease," he said.

The pressure, however, will not be removed entirely.

"Prices are unlikely to fall back to the level we saw before the energy crisis," he said.

"Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain."

Spending on the EPG will effectively be zero from July until the end of 2023 as Ofgem's energy price cap is expected to fall below the guarantee, according to Cornwall Insights.

Ofgem's July and October caps are forecast to be below £3,000. Such caps would mean there is no price difference in amounts charged by energy companies and what customers pay.
Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
×