Published by Global Banking & Finance Review®
Posted on May 23, 2025
2 min readLast updated: January 23, 2026
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Ofgem cuts UK energy price cap by 7%, reducing bills for millions. Despite the drop, prices remain high. Consumers are advised to seek better deals.
By Susanna Twidale
LONDON (Reuters) -Millions of British households will see lower energy bills from July after regulator Ofgem cut its price cap by 7%, a move that will boost government efforts to ease a cost of living squeeze.
The cut, the first in nearly a year, comes against a backdrop of strained consumer budgets. Data earlier this week showed a bigger-than-expected rise in inflation in April.
Despite the fall, domestic energy prices remain around 50% higher than they were in the summer of 2021, before Russia’s invasion of Ukraine sent gas prices soaring and sparked an energy crisis in Europe.
Consumer groups said that energy costs remain unmanageable for many households and called for more support for those struggling.
"Any fall in the price of energy is always welcome news, but this is a short fall from a great height. Bills remain punishingly high for low-income households," Adam Scorer, Chief Executive of energy poverty charity National Energy Action, said.
Ofgem Director General of Markets Tim Jarvis said people should look for better deals that could be as much as 200 pounds a year cheaper than the price cap.
“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there so it’s important to shop around," he said in a press release.
British Prime Minister Keir Starmer on Wednesday said he recognised that older people were still feeling the pressure of energy prices and he wanted to ensure that more pensioners become eligible for winter fuel payments, having curbed the number of people eligible last year.
Ofgem's new cap of 1,720 pounds ($2,314.43) a year for average use of electricity and gas is down 129 pounds from the previous cap for April-June.
The fall reflects a drop in wholesale prices.
"Global wholesale prices for energy have gone down. While this is the main cause, changes to supplier business costs have also made an impact on energy prices falling," Ofgem said in a statement.
The price cap was introduced in 2019 to protect consumers and covers around 65% of households.
($1 = 0.7432 pounds)
(Reporting by Susanna Twidale in London, Yadarisa Shabong in Bengaluru; Editing by Mrigank Dhaniwala, Tomasz Janowski and Jane Merriman)
Ofgem's new cap is set at 1,720 pounds ($2,314.43) a year for average use of electricity and gas.
The price cap has decreased by 7%, which amounts to a reduction of 129 pounds from the previous cap.
Despite the reduction, energy prices remain about 50% higher than they were in the summer of 2021, primarily due to the energy crisis following Russia's invasion of Ukraine.
Ofgem advised consumers to shop around for better deals, which could save them as much as 200 pounds a year compared to the price cap.
British Prime Minister Keir Starmer mentioned the need to ensure that more pensioners become eligible for support to help with energy costs.
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