It’s important to note that the price cap is not actually a cap on energy bills, it is instead a cap on how much suppliers can charge you for each unit of energy you use. This means the more energy you use, the higher your bill will be
Octopus has urged its customers to act ahead of Ofgem’s price cap change in July. Last week, the energy regulator announced that its price cap would be dropping by £129 – or 7% – from July 1.
Currently, the price cap sits at £1,849 for the typical direct debit customers. From July 1, this will drop to £1,720 a year.
It’s important to note that the price cap is not actually a cap on energy bills, it is instead a cap on how much suppliers can charge you for each unit of energy you use. This means the more energy you use, the higher your bill will be.
The price cap is the lowest it’s been since October 2024, and although it has gone down, energy prices are still much more expensive they they used to be. For example, last July, the price cap sat at £1,568 a year.
Although prices have come down over the last two years, the energy market is volatile and incredibly susceptible to global politics and conflicts. This means there isn’t much stability with prices.
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Last week, energy analysts at Cornwall Insight published their latest prediction for Ofgem’s price cap. The group – which has accurately predicted price cap movements in recent years – expected a “modest drop” in the price cap this October, followed by another in January 2026.
However, as mentioned before, it says a range of factors could shift these forecasts, including changing weather patterns, the relaxation of EU gas storage rules, US tariffs and the continuing war in Ukraine.
This means if you aren’t on a fixed rate deal and are on your provider’s “standard variable rate” then you could see prices rise again.
The price cap changes every three months, so the new level will be in place until September 30, when it will then be updated again.
Energy provider Octopus has urged its customers to consider switching to a fixed-rate deal. In an email, it said locking into a fixed tariff ahead of the price cap change in July would be more beneficial and result in bigger savings in the long-term.
The email said: “From July 1st – September 30th 2025, the energy price cap for a typical home using gas and electricity and paying by Direct Debit will be £1,720 per year. This is 7% less than the April price cap, and will knock about £11 off monthly bills.
“However, even though variable rates have dropped, we think it’s still worth locking in your prices on a fixed tariff. These currently offer our cheapest rates, meaning you could save more in the long run.
“This could change in the future, so check out our price cap predictions page for a sense of how we think prices could fluctuate over the year. Just bear in mind there are no guarantees.”
A fixed rate tariff locks prices for a set period of time – usually this is a minimum of 12 months. However, it can be even longer and up to 24 months in some cases.
As you are locked in, you will not be affected by any changes in the price cap throughout this period. This means you know exactly how much you’ll pay per unit of gas and electricity you use during this set time.
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