Rajan Wilcox
Energy bills have been a cause for concern for millions of households in the UK. Energy prices have been steadily increasing since the summer of 2021, with prices spiking after Russia's invasion of Ukraine in February 2022. While prices have dropped by 7% since 1 July 2025, they are still well above pre-'energy crisis' levels. With the cost of living crisis looming, many are wondering how much their fuel bills will increase and what support is available to those struggling to pay their energy bills.
| Characteristics | Values |
|---|---|
| Energy price cap | £1,720 a year from 1 July 2025 |
| Previous energy price cap | £1,849 a year from 1 April to 30 June 2025 |
| Gas prices (capped) | 6.99p per kilowatt hour (kWh) from 1 April to 30 June 2025 |
| Electricity prices (capped) | 27.03p per kilowatt hour (kWh) from 1 April to 30 June 2025 |
| New gas prices (capped) | 6.33p per kilowatt hour (kWh) from 1 July to 30 September 2025 |
| New electricity prices (capped) | 25.73p per kilowatt hour (kWh) from 1 July to 30 September 2025 |
| Annual bill for dual-fuel direct debit household (previous) | £1,849 per year |
| Annual bill for dual-fuel direct debit household (new) | £1,720 per year |
| Annual bill for households on prepayment meters (previous) | £1,803 |
| Annual bill for households on prepayment meters (new) | £1,672 |
| Energy price drop | 7% |
| Average regular gas price in the U.S. as of July 2, 2022 | $3.171 per gallon |
| Average regular gas price in the U.S. as of July 2, 2021 | $3.500 per gallon |
| Global energy price increase | Started in summer 2021 |
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Energy price cap
The energy price cap is the maximum amount energy suppliers can charge for each unit of energy and standing charge if a household has a standard variable tariff. The price cap does not apply to fixed-term energy deals. The cap is set by the energy regulator Ofgem, and it is reviewed and updated every three months. The price cap also makes sure that prices for people on a standard variable tariff (default tariff) are fair and reflect the cost of energy.
The energy price cap covers around 21 million households in England, Wales and Scotland. Households on prepayment meters pay slightly less than those on direct debit, while people paying bills by cash or cheque pay more. The actual rates charged depend on where the customer lives, how they pay their bill, and the type of meter they have.
The latest energy price cap came into effect on 1 July 2025, reducing bills for those on a variable tariff by 7%. The price cap was set at £1,720 per year for a typical household using electricity and gas and paying by Direct Debit. This was a decrease of 7% compared to the previous cap of £1,849 per year.
The future direction of energy prices is hard to predict. Analysts at energy consultancy Cornwall Insight have forecast a 1% drop in October, which would take the annual bill for a household using a typical amount of gas and electricity to £1,697 a year. However, there is concern that energy bills will rise again later in the year when it is colder.
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Fuel bill support
Energy prices in the UK have been soaring, with the price cap set at £1,720 a year from 1 July, which runs until the end of September. This marks a drop compared to the previous cap of £1,849 that was in place between April and June. The price cap is reviewed quarterly, and the next review is expected to result in a slight drop to £1,698 a year.
These rising energy prices have put a strain on many households, and some energy suppliers offer support to their customers. For example, Octopus Energy has Octo Assist, and British Gas has the British Gas Energy Trust. Here are some options to consider if you are struggling with your fuel bills:
- Contact your energy supplier: They may be able to offer support, such as a repayment holiday or an affordable payment plan.
- Apply for grants and benefits: There are grants, benefits, and other support available to help with energy bills, including the Winter Fuel Payment, Cold Weather Payment, and the Warm Home Discount scheme. Your local council might also be able to help you get a fuel voucher.
- Seek advice: Organisations such as Citizens Advice and StepChange offer free advice and support to people struggling with energy bills and debt.
- Reduce your energy usage: Consider using a smart meter to track your energy usage and identify areas where you can save energy.
- Switch to a Pay As You Go Meter: This can help you budget by paying for your energy before you use it, and you'll benefit from a reduced unit rate.
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Prepayment meters
Previously, prepayment meters were charged at a premium, meaning households paid more on average for their energy than direct debit customers. However, as of June 2023, the UK government stepped in to scrap this unfair charge, saving households around £21 a year on their bills. This change brought the bills of approximately three million households across Great Britain in line with those who pay by direct debit.
In July 2025, UK energy prices dropped by 7% after the latest price cap came into effect, reducing bills for those on a variable tariff. The price cap is set by the energy regulator, Ofgem, and determines the maximum amount customers can be charged for each unit of energy. The price cap covers around 21 million households in England, Wales and Scotland and is set every three months.
Despite the removal of the prepayment meter premium and the recent drop in energy prices, households with prepayment meters may still struggle with rising energy costs. As of March 2025, Citizens Advice estimated that 1.7 million people in the UK had run out of credit on their prepayment meters in the previous year, with 800,000 going more than 24 hours without gas and electricity due to an inability to afford to top up.
If you are struggling to pay your energy bills, there is support available. All suppliers offer small amounts of emergency credit, typically between £5 and £10. Additionally, the Fuel Direct Scheme allows eligible benefit recipients to pay their energy bills directly from their benefit allowance.
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Gas prices
The energy price cap sets the maximum amount customers can be charged for each unit of energy. The price cap is set every three months by Ofgem. Between April and June 2022, the price cap was set at £1,849 per year for a dual-fuel direct debit household using a typical amount of energy. From July to September 2022, the price cap was lowered to £1,720 per year. This meant that gas prices were capped at 6.33p per kilowatt hour (kWh).
In October 2022, the energy price cap was expected to increase by 80%, with gas prices rising by 91%. The Energy Price Guarantee (EPG) was introduced in October 2022, capping prices at a level below the original price cap. Despite this, average prices still increased by 27% in October 2022. Gas prices were 37% higher than in summer 2022.
The increase in gas prices has put pressure on households, with many struggling to afford their energy bills. Some energy suppliers offer support, such as hardship grants or repayment holidays. Fixed-rate deals have also become available, offering longer-term stability for energy bills.
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Energy crisis
The energy crisis is a global issue that has been building up over time, with market tightening beginning in 2021 due to the rapid economic recovery from the pandemic. However, the situation escalated dramatically following Russia's invasion of Ukraine in February 2022, leading to record-high natural gas and electricity prices in some markets. Oil prices also reached their highest level since 2008. The current energy crisis is unique compared to the oil shocks of the 1970s as it involves all fossil fuels, and the highly interconnected global economy amplifies its impact.
This crisis has had far-reaching consequences, contributing to high inflation, pushing families into poverty, forcing factories to reduce operations or close, and slowing economic growth. Europe, which is highly dependent on Russian gas, is particularly vulnerable and could face gas rationing this winter. Emerging economies are also severely affected, with higher energy bills exacerbating extreme poverty and hindering progress toward universal and affordable energy access.
The energy crisis has prompted a re-evaluation of energy policies and priorities, highlighting the need to reduce reliance on Russian gas and explore alternatives such as renewable energy sources. It has also underscored the importance of investing in robust gas and power network infrastructure to enhance regional market integration. Initiatives like the EU's RePowerEU and the United States' Inflation Reduction Act aim to improve energy efficiency and promote renewable energy sources.
Mitigation strategies are crucial to navigate the energy crisis. These include energy conservation, fuel substitution, unconventional oil use, and the establishment of secure fuel reserves. Policy reforms, such as carbon taxation and phasing out petroleum, can also help mitigate the crisis. Additionally, individuals can take action by reducing their energy consumption, such as lowering their thermostat or turning off air-conditioning when not at home.
While the energy crisis presents significant challenges, it also creates opportunities for a transition to cleaner and more sustainable energy sources, similar to how the 1970s oil shocks accelerated advancements in energy efficiency and renewable power technologies.
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Frequently asked questions
The increase in your fuel bill depends on how much gas and electricity you use. In the UK, the energy price cap was set at £1,720 a year from 1 July 2025, which was a 7% drop from the previous cap of £1,849. In the US, the average regular gas price was $3.171 per gallon as of July 2, 2022, down from $3.500 a year prior.
Global prices for gas, electricity, oil, and other fuels started to increase from the summer of 2021 when economies began to open up after pandemic-related lockdowns. This increase was exacerbated by a reduced supply of fuels from some producers and increased tensions between Russia and Ukraine.
If you are struggling to afford your energy bills, you should contact your energy supplier as they may be able to offer support. For example, some suppliers have hardship grants or repayment holidays. Alternatively, you may be able to agree on an affordable payment plan or, if you are on benefits, you might be able to repay your debt through the Fuel Direct Scheme.
