The energy price cap has dropped again. From 1 July 2025, the maximum a supplier can charge on a standard tariff is down 7% from £1,847 to £1,720 a year for a typical household.

That’s around £11 a month back in your pocket.

So, what does that mean in plain English?

What is the price cap?

It’s the maximum rate energy suppliers can charge per unit of gas and electricity if you’re on a standard variable tariff, which is what most UK households are on.

It’s reviewed every 3 months by Ofgem (the UK energy regulator), based on how much it costs suppliers to buy energy. When those costs drop, the cap can fall – which is what’s just happened.

But to be clear: the £1,720 figure isn’t a cap on your total bill. It’s based on a “typical” usage level. If you use more, you’ll pay more. If you use less, you’ll pay less.

What does “£1,720 a year” actually mean?

This number comes from Ofgem’s estimate of a typical dual-fuel household, that’s a home using both gas and electricity, paying by direct debit. It assumes:

• 2,700 kWh of electricity
• 11,500 kWh of gas

That adds up to around £143 a month. Most of that goes on gas, especially in winter for heating and hot water. If you live in a smaller home or don’t use gas, your bill will likely be lower.

How much will I actually save?

For the average 2–3 bedroom home with 2 to 3 people, it’s about £127 a year, or just under £11 a month. Your exact saving depends on how much you use, but most households will see a small drop in both gas and electricity bills.

And the best bit? You don’t need to do anything. If you’re on a standard variable tariff, the change kicked in automatically from 1 July 2025.

Will prices keep falling?

Hard to say. Wholesale energy prices have been falling slowly, but the next cap review comes in October, just before winter kicks in. That’s when demand (and costs) typically rise.

For now, though, things are looking better than they have in years.

What else can I do to cut costs?

A lower price cap is a bonus, but how and when you use energy still has a big impact. To save more, consider:

• Timing your usage – run dishwashers and washing machines during off-peak hours if your supplier offers time-based tariffs
• Improving efficiency – small things like draught-proofing or smart thermostats can make a big dent in bills
• Checking your EPC rating – in the Tandem app, you can see how efficient your home is, and get a personalised Green Home Plan to help improve it

The bottom line

You’ve already saved without even trying. Now, layering in small changes at home can save you even more.

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Sources:

Energy price cap will drop in July — MoneyWeek, 4 July 2025

How the new energy price capaffects your bills — MoneyWeek, July 2025

Typical household usage explained — Ofgem

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