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Energy price cap reduced by 7% but "many households remain under immense financial strain"

ended 23. May 2025

Ofgem has just announced that, from 1 July to 30 September 2025, the price for energy for a typical household who use electricity and gas and pay by Direct Debit will go down by 7% to £1,720 per year. Full announcement >> here <<. For a typical household, this will reduce their energy bills by £11 a month. It says the reason for this is that global wholesale prices for energy have gone down, adding: “While this is the main cause, changes to supplier business costs have also made an impact on energy prices falling.” Newspage asked experts for their views, below.

4 responses from the Newspage community

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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
Ofgem's announcement of a life-changing £11 monthly savings during summer when heating remains firmly off is obviously Labour's regulatory courage at its finest. This 7% reduction during Britain's three warmest months arrives while energy giants reported £33 billion in profits last year. The mathematical wizardry is especially impressive: wholesale prices have dropped 23% while consumer bills fall just 7%. Most spectacularly, households still pay £1,720 annually, £650 above pre-crisis levels while our Energy Secretary will herald this as vindication of Labour's strategy, implemented right after they axed £400 winter support for millions. The cap itself remains a peculiar innovation, designed to prevent consumers being ripped off while somehow ensuring we pay Europe's highest rates.
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Harry Mills
Director at Oku Markets
While we welcome Ofgem's announcement of a fall in the energy price cap, make no mistake: many households remain under immense financial strain. Suppliers and policymakers must now focus on long-term affordability strategies for our energy, especially as UK households currently face the fourth highest electricity prices in Europe. But for now, at least it isn't going up.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Global energy prices have fallen and hopefully this reduction will help keep inflation at bay. However, the UK still has one of the highest energy costs in Europe so we still get the rough end of the deal. The average £11 per month saving will no doubt be swallowed up in other cost of living rises so, although welcome, this reduction won’t make much difference to households across the country.
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David Belle
Founder and Trader at Fink Money
A large part of the increase in CPI was due to the energy price cap. However a large offsetter was motor fuel costs dropping. I track wholesale energy costs and it hasn't increased. How can motor fuel costs drop while wholesale energy costs have apparent gone up, leading to the price cap increase? It doesn't make sense, and I think OFGEM have been found out here to be wholly working in the interests of energy firms who are still recovering pandemic debts, which now is why they're dropping the price 7%. They are an abysmal regulator and it's time they were brought to justice.