Gas and electricity bills will fall on 1 July, when the new energy price cap takes effect.

The drop will more than reverse the increase which millions of households faced on 1 April when the current cap began.

The energy price cap sets the maximum amount customers can be charged for each unit of energy, but actual bills depend on how much gas and electricity you use.

The energy price cap covers around 21 million households in England, Wales and Scotland and is set every three months by Ofgem.

It fixes the maximum price that can be charged for each unit of energy on a standard – or default – variable tariff for a typical dual-fuel household which pays by direct debit.

Between 1 April and 30 June 2025, gas prices are capped at 6.99p per kilowatt hour (kWh), and electricity at 27.03p per kWh.

This means the annual bill for a dual-fuel direct debit household using a typical amount of energy is £1,849 per year, an increase of £111 from the previous cap.

However, from 1 July, this annual bill falls £129 to £1,720.

Between 1 July and 30 September 2025, gas prices will be capped at 6.33p per kilowatt hour (kWh) and electricity at 25.73p per kWh.

Those who pay their bills every three months by cash or cheque pay more, but those on prepayment meters pay a little less.

The cap does not apply in Northern Ireland, which has its own energy market.

Your energy bill depends on the overall amount of gas and electricity you use, and how you pay for it.

The type of property you live in, how energy efficient it is, how many people live there and the weather all make a difference.

The Ofgem cap is based on a “typical household” using 11,500 kWh of gas and 2,700 kWh of electricity a year with a single bill for gas and electricity, settled by direct debit.

The vast majority of people pay their bill this way to help spread payments across the year. Those who pay every three months by cash or cheque are charged more.

Submitting a meter reading when the cap changes means you will not be charged for estimated usage at the wrong rate.

This is especially important when prices go up.

Customers with working smart meters do not need to submit a reading as their bill is calculated automatically.

About four million households had prepayment meters in January 2025, according to Ofgem.

Between April and June, households on prepayment meters paid slightly less than those on direct debit, with a typical bill of £1,803, a rise of £113 from the previous quarter.

From 1 July, households on pre-payment meters will still pay slightly less than those on direct debit, with a typical annual bill of £1,672.

Many pre-payment meters have been in place for years, but some were installed more recently after customers struggled to pay higher bills.

Rules introduced in November 2023 mean suppliers must give customers more opportunity to clear their debts before switching them to a meter. They cannot be installed at all in certain households.

Households who pay their bills by cash or cheque will pay more than pre-payment or direct debit customers, with a typical annual bill of £1,855

Fixed-price deals are not affected by the energy price cap, which changes every three months and can rise and fall.

They offer certainty for a set period – often a year, or longer – but if energy prices drop when you are on the deal, you could be stuck at a higher price. You may also have to pay a penalty to leave a fixed deal early.

Ofgem, the energy regulator, says customers who want the security of knowing what their bill will be should consider moving to a fixed deal. However, it says they should make sure they understand all the costs.

Martin Lewis, founder of Money Saving Expert, recommends checking whole-of-market energy price comparison sites to help find the best deal.

Standing charges are a fixed daily fee to cover the costs of connecting to gas and electricity supplies. They vary slightly by region.

On 1 April, the average electricity standing charge fell from 60.97p to 53.8p but the average gas standing charge increased from 31.65p to 32.67p

Some customers in London and the North Wales and Mersey region saw larger increases.

From 1 July, standing charges will typically fall to 51.37p a day for electricity and 29.82p a day for gas.

Campaigners argue standing charges are unfair because they make up a bigger proportion of the bill of low energy users.

In response, Ofgem has said that energy firms must provide a choice of price-capped tariffs from winter 2025.

One would have a standing charge and unit rate – as is the case now – and another no standing charge but a higher unit rate. However, the proposals have been criticised as being too complicated.

The Household Support Fund, which was introduced in September 2021 to help vulnerable customers, has been extended until March 2026.

The Warm Home Discount scheme is being overhauled. From winter 2025, anyone on means-tested benefits will automatically see £150 taken off their bills, no matter what size of property they live in.

The government’s Fuel Direct Scheme can help people to repay an energy debt directly from their benefit payments.

In addition, suppliers must offer customers affordable payment plans or repayment holidays if they are struggling with bills.

Most suppliers also offer hardship grants.