UK households will see a reduction in energy bills this summer after energy regulator Ofgem announced a 7% cut to the price cap.
The new limit, effective from July to September, will lower average annual bills from £1,849 to £1,720.
First price drop since last summer
This is the first time the cap has fallen since July 2024, offering modest relief to families grappling with the ongoing cost of living crisis. The change follows a decline in wholesale gas prices, helped by mild temperatures and reduced demand in global markets, particularly the US.
Despite the reduction, bills remain 9% higher than they were in the summer of 2024 and considerably above pre-crisis levels. Utility costs were a major driver behind April’s 15-month peak in inflation at 3.5%, which has put pressure on the Bank of England to delay interest rate cuts.
Miliband locked on to renewable transition
Ed Miliband, the UK’s energy secretary, welcomed the cap reduction but warned that long-term affordability depends on transitioning to renewable energy. He reiterated the government’s commitment to building more renewable infrastructure to stabilise prices.
Ofgem’s quarterly price cap review determines what suppliers can charge customers on standard variable tariffs. From July, the electricity unit price will be capped at 25.7p/kWh, with a daily standing charge of 51.4p. For gas, it will fall to 6.3p/kWh with a standing charge of 29.8p—both down from current rates.
The UK relies heavily on imported gas, sourcing nearly 90% from Norway and the US. While another price cut is expected later in the year, bills remain sensitive to global energy market fluctuations, particularly as winter approaches.
