The energy price cap will drop today by 7% after an announcement by Ofgem that energy bills will fall. The price cap period from July to September 2025 can be attributed to a recent fall in wholesale prices and can account for about 90% of the fall in prices.
Director of general markets at Ofgem, Tim Jarvis, said:
All fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy.
The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you.
Fixing or Sticking with Variable Rates
What are the Pros and Cons of Fixed and Variable Tariffs
Don’t know if you choose a fixed or variable tariff? This is an issue many households run into. Let’s take a look at the differences between the two.
| Type | Advantages | Risks |
| Price Cap (Default Version) | Flexibility, no exit fees, and benefits if market prices fall further. | Subject to quarterly cap changes; can’t predict future rates. |
| Fixed-Term (12-24 months) | Locks in stable unit rates; gives certainty. | Missing out if prices drop; early exit fees may be higher than the cap. |
Still not sure? You could look to Money Saving Expert, Martin Lewis, for his expert guidance. He states:
- You should fix if the tariff is 6% below the current cap, as this shows strong saving potential.
- If it’s between 3-6% below the current price cap, then it’s likely you could make a saving.
- If the tariff is less than 3%, it’s unlikely to beat the cap rate.
Is Now the Best Time to Fix?
Yes: Do you value budget certainty? Want to avoid potential price rises in winter? Then, finding a deal significantly below the cap is the way forward for you.
No: If there are likely to be further cap reductions, and you expect better variable rates soon.
What Tariffs Are Out There?
Several fixed deals are currently available on the market that are cheaper than the new price cap of £1,720 a year. These could potentially save you over £200 annually.
- Outfox the Market: Dual-fuel fix at £1,517/year
This saves you £203
- EDF 12-month fixed: £50 below the cap and a 3% saving.
- E.ON Next Pledge and Octopus Time-of-Use:
Both deals lock in below-cap rates. They also offer incentives, like Octopus Energy’s free hour-long electricity sessions.
Stay Smart When Shopping for Tariffs
Here are a few tips you can use to find the best tariff for you and your household:
- Check your usage and needs – How many kWh do you use? Do you split your usage between night and day? Which method do you use to pay your energy bills?
- Use comparison sites such as Uswitch or MSE to find tariffs tha are below the £1,720 threshold.
- Take note of the details. Do you have to pay exit fees?
- If you choose a variable tariff, make sure to stay on top of price cap reviews. Use Google Alerts or notifications alerts for news websites.
- Before any price cap, submit meter readings to avoid paying higher estimated rates.
Make the Most of the Energy Price Cap Drop
Although the energy price cap drop brings some welcome relief, it still remains quite high when compared to previous years.
If you are looking for energy bill certainty, locking into a deal that is 3-6% cheaper than the current price cap is most likely your best bet. You could even extend your savings by applying for several government-backed energy grants. Energy Advice Helpline can help you apply for the grants below.
