The Energy Price Cap is set by Ofgem and is designed to protect consumers by capping the maximum price that energy suppliers can charge per unit of gas and electricity. This cap is updated every 3 months, and impacts around 28 million households.

Earlier this month on July 1st, households across Great Britain saw their annual energy bills fall by 7% following the latest change in the energy price cap announced by Ofgem, the energy regulator. Whilst this sounds like great news, and it is, it’s essentially taking the cap back to where it was at the start of 2025 and is still much higher than this time last year.

As a result of this latest change, households will now be paying around £1,720 - this is nearly 10% higher than July 2024.

Approximately 9 million homes on variable tariffs saw an immediate impact in July, while those on fixed tariffs will experience a delay before any changes take effect.

Key Points on the Latest Energy Price Cap:

1. Average standing charges and unit rates if you pay by Direct Debit

Rates and standing charges are averages, which vary by region. Assumes payments by Direct Debit and includes VAT (at 5%). For those who pay each month after getting a bill, it's 6% higher.

2. Impact on Annual Bills

• Typical Annual Bill: An average household paying by direct debit will have an annual bill of £1,720, which is a 7% decrease from the previous period (Apr to Jun) but is still 10% higher than this time last year.

3. Standing Charges:

This is a charge you pay on a daily basis irrespective of how much (if any) energy you use.

• Electricity: Standing charge: 51.37p/day (from 53.80p/day) - down 4.5%.

• Gas: Standing charge: 29.82p/day (from 32.67p/day) - down 8.7%

4. Support for Vulnerable Customers:

All energy suppliers, under Government rules, need to provide support for certain customers such as the elderly, the vulnerable, those with young children and those in fuel poverty. If you think you might qualify for support you should contact your energy supplier.

There may also be additional support you qualify for, and more information can be found at Energy UK.

It is important to note that the Price Cap applies to standing charges and unit rates, not the total bill. There is no limit to the overall amount a household may pay and the more energy used, the higher the bill. The estimated costs provided are based on a 'typical household' consuming 11,500 kWh of gas and 2,700 kWh of electricity annually, which serves as the basis for the average bill mentioned above.

Is a Fixed-Price Deal Better For You?

If you’re on a variable tariff from your energy supplier and subject to the Energy Price Cap, there are cheaper alternatives available.

The cheapest year-long standalone fixes right now are about 5%-10% lower than the current Energy Cap.

To help you benefit from lower prices, CreditLadder has partnered with a best buy energy company where you could save up to 10% compared to the Energy Cap - click here for more information.

Summary

Even with the Energy Cap reducing by 7% it is still higher than it was this time last year.

Remember if you’re on a variable tariff and therefore paying Energy Cap prices then you can save money by changing your tariff so it may be something to look at sooner rather than later.

Remember, CreditLadder can help you improve your credit score.

CreditLadder can improve your credit position by reporting your rent payments. CreditLadder is the first way to improve your credit score and position across all three of the main Credit Reference Agencies in the UK, namely Experian, Equifax and TransUnion. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money. CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the content provided in this article is for information purposes only and should not be considered as advice.