OVO Energy Review (2025)
May 16, 2025Energy prices are set to fall by about 7 % (roughly £129 a year) from 1 July 2025, after Ofgem confirmed today that the price cap for a typical dual-fuel household will drop from £1,849 to £1,720.
Under the new cap, unit rates will be 25.73 p/kWh for electricity and 6.33 p/kWh for gas, with daily standing charges nudging down to 51.37 p and 29.82 p respectively. That equates to an average monthly bill of just under £143, giving many households a welcome break from high costs, though the cap still sits around £600 above pre-crisis levels.
If you’re on a standard variable tariff or your fixed contract is ending soon, you’ll probably notice lower bills. Regulators say the cut reflects easing wholesale prices and trimmed supplier operating costs.
Wondering what this actually means for your monthly budget? There are some fresh tariffs and offers out there worth checking out, especially with Octopus Energy’s updated plans (its latest 12-month fix now sits below the new cap) and those sign-up bonuses for new customers.
Key Takeaways
- July 2025 brings a lower energy price cap and reduced typical household bills.
- Now could be a great time to switch to a fixed tariff.
- The price cap is lower, but you are still better off switching to a non-price cap tariff.
Why has the price cap come down?
Starting July 2025, many households will see lower energy bills thanks to a drop in the price cap. Ofgem adjusts the cap based on shifts in wholesale energy prices and what’s happening in the market overall.
How the Price Cap is set
Every few months, Ofgem sets the energy price cap to shield consumers from unfair price hikes. The cap limits what your supplier can charge for each unit of gas and electricity if you’re on a standard variable tariff. It doesn’t cap your total bill, but it does control the rate you pay for energy.
When Ofgem reviews the cap, it uses a formula that factors in what providers pay for energy, business costs, and government policies. If those costs drop, so does the cap—so your bill probably goes down too.
Ofgem tries to keep things fair for both you and your supplier by reviewing the cap with the most current data. Their latest review points to a typical household saving about £129 a year from July, which is the first real price drop in a while for many UK homes. More details on the energy price cap drop are available if you want to dig deeper.
What drives falling energy prices?
Wholesale energy costs mostly drive these price drops. When the market price for gas and electricity falls, suppliers pay less, and those savings get passed on to you through a lower price cap. Why do wholesale prices go down? A few reasons:
- More supply, especially from renewables
- Lower global demand, maybe from mild weather or slowdowns in industry
- Stable fuel markets and strong storage levels
If government levies or network costs go down, that helps too. All these things add up, so Ofgem can reduce the price cap, and you end up paying less if you’re on a variable tariff.
Ofgem’s role in setting the cap
Ofgem stands as the independent regulator for gas and electricity in Great Britain. It sets the price cap and makes sure energy suppliers play by the rules. Ofgem updates the cap regularly to keep up with market shifts and protect you from sudden price jumps.
They collect and review data on wholesale prices and business costs, checking that suppliers don’t charge above the cap. If a supplier breaks the rules, Ofgem steps in. Their work keeps things fair and transparent so that you can trust that your bills aren’t padded with unnecessary costs.
How will the price cap affect you?
With the July 2025 price cap drop, most people should see smaller bills, though how much you save depends on your tariff and how much energy you use. Some groups, like low-income households or pensioners, might see different impacts or qualify for extra help.
Average annual bill projections
From July 2025, the price cap is expected to bring the average annual bill for a typical household down to about £1,568. That’s a decent drop from before, and honestly, a bit of relief as living costs keep climbing.
If your family uses an average amount of gas and electricity, you could save around £120 a year compared to earlier rates. This change will be most obvious for those paying by direct debit, since those payments are usually spread out evenly.
Standing charges and unit rates might shift differently depending on your region. Still, most people will notice lower totals on their bills. Want to see your exact savings? Try your supplier’s online calculator or ask them directly.
Effects on Vulnerable Groups and Fuel Poverty
Vulnerable people, like those on low incomes or with disabilities, will benefit from the cap reduction, but many still struggle with energy costs. If you’re in fuel poverty, even small price changes matter a lot.
The cap cut eases some of the pressure, but its effect isn’t the same everywhere. Standing charges vary by region, so savings might not be huge for everyone. Pensioners and families with young kids face extra risk during cold months.
Many still need help to keep their homes warm. Government schemes and local charities are crucial for preventing hardship and making sure vulnerable households stay safe.
Comparing fixed and variable tariffs
When prices go down, choosing between a fixed deal and a variable tariff can make a real difference to your budget.
A fixed deal locks in your price for a set time, so you’re protected if prices go back up, but you might not see instant savings if rates drop fast. Variable tariffs, which follow the price cap, usually pass on cuts more quickly.
Switching from a fixed to a variable tariff can make sense when the cap falls, but always check for exit fees before you jump. Compare standing charges and unit rates to figure out what’s best for your situation.
What should you do now?
With the price cap falling in July 2025, you’ve got more ways to cut your energy bills. Taking a little time now to compare providers could really pay off.
Switching energy provider and competitive deals
Switching suppliers is often one of the fastest ways to save. Companies like Outfox the Market, Octopus Energy, and British Gas regularly offer perks for new customers, like account credit or lower rates. For instance, there’s a £50 bonus when switching to Octopus Energy.
Some providers focus on green energy, others on price. It’s smart to check deals on comparison sites and look at customer reviews for things like service and billing accuracy. Watch out for exit fees if you’re leaving a fixed contract.
Look for deals that fit your energy habits. Special offers can disappear fast after price cap changes, so grab them while they’re around. Up-to-date info is key, since rates and discounts tend to move quickly.
Fixed rate energy deals and green tariffs
Fixed rate deals let you lock in a set price for gas and electricity, usually for a year. That means no surprise hikes if the market shifts. The new cap has prompted many suppliers to launch 12-month fixed tariffs, some up to 12% below the cap.
Green tariffs let you support renewables. Some suppliers now offer green deals with competitive fixed rates, so you don’t have to pick between sustainability and savings.
If you’re interested in fixed or green deals, compare offers from providers like Octopus Energy and British Gas. Always read the fine print—contract length, exit fees, and where the electricity comes from can all matter.
What does Martin Lewis think?
You can see what Martin Lewis thinks here:
Frequently Asked Questions
Energy prices will change for many people starting in July 2025, mainly due to the new cap set by Ofgem. You will likely see a difference in what you pay depending on your use and whether you’re on a standard variable tariff.
How will the July 2025 energy price cap reduction affect my bill?
Starting in July 2025, the energy price cap drops, so most households should see lower electricity and gas bills. This change hits standard variable tariffs, so if you’re on one of those, your annual costs will probably shrink a bit.
How much do you save? Well, that’s all down to how much energy you use and what tariff you’re on. Prepayment and fixed-rate customers might notice changes, but it won’t look quite the same as for everyone else.
What are the latest predictions for the energy price cap in late 2025?
Right now, most forecasts point to prices levelling out or maybe nudging up slightly after July’s drop. It all hinges on wholesale energy markets, global supply issues, and, let’s be honest, a bit of luck.
No one’s released official numbers for late 2025 yet. Experts mostly agree you should expect minor tweaks every quarter since the cap gets reviewed regularly.
Can you explain the changes to the per kWh cost under the new July 2025 energy price cap?
With the new cap, you’ll pay less per kilowatt-hour (kWh) for both gas and electricity. That means customers on default tariffs get a break on their bills.
Standing charges? Those might stick around at current rates or shift a bit, depending on your region and who supplies your energy. It’s worth checking your bill to see exactly what you’ll pay per kWh once the new rates kick in.
How does the July 2025 energy price cap compare to previous caps in history?
Honestly, the July 2025 cap will bring bills down to levels we haven’t seen in years. Remember those steep hikes in 2022 and 2023? The cap started easing in 2024, and now it’s dropping again in 2025.
This turnaround comes after wholesale prices fell and government rules stepped in to shield people from wild price swings.
Has Martin Lewis offered advice on how to manage energy bills post-July 2025 cap adjustment?
Martin Lewis has weighed in with some guidance on handling bills after the July 2025 price cap change. He suggests checking your tariff, comparing deals, and—if it makes sense—switching to avoid paying more than you should.
He encourages people to look at their options before deciding whether to stick with their current plan or jump to a fixed deal. If you want the nitty-gritty, his latest advice is over here: energy price cap fall in July.
