Energy costs have rocketed to record highs, meaning much higher bills for all customers. Find out why, and what you can do to protect yourself.
Energy prices have eased since the worst of the crisis, but they remain significantly higher than before 2021. The surge in bills between 2021 and 2023 was caused by soaring wholesale gas prices, triggered by post-pandemic demand and the disruption of global energy supplies following Russia’s invasion of Ukraine. This led Ofgem, the energy regulator, to raise the energy price cap to record levels, peaking at more than £4,200 per year in early 2023 for a typical household.
To shield households from the sharpest rises, the government introduced the Energy Price Guarantee (EPG), which limited annual bills to £2,500 until June 2023. The EPG has now ended, and households are once again paying prices directly linked to the Ofgem price cap. While the price cap has fallen considerably since its peak, average bills are still nearly double what they were before the crisis began.
It is important to note that the price cap does not limit the total amount you pay – it limits the unit rates and standing charges energy suppliers can charge. If you use more energy than the typical household, your bill will be higher.
After peaking in 2022, wholesale gas and electricity prices have fallen thanks to lower demand and Europe diversifying its supply away from Russia. This has brought down the price cap in stages throughout 2023 and 2024, giving some relief to households. However, wholesale costs have risen slightly over the summer of 2025, which has pushed the cap up for the final quarter of the year.
From 1 July 2025, the energy price cap for a typical household paying by direct debit was £1,720 per year. From 1 October 2025, the cap rises slightly to £1,755 per year – an increase of about 2%. This means that for every £100 you spend on energy today, you can expect to spend around £102 from October onwards. Unit rates from October are around 26.35p/kWh for electricity and 6.29p/kWh for gas, with standing charges of around 53.68p/day and 34.03p/day respectively.
These figures are based on average household usage. If your energy use is above average – for example, if you have electric heating or a large family – your bill will be higher.
With prices now much lower than during the peak of the energy crisis, some suppliers are offering competitive fixed-rate tariffs again. Fixing your deal could give you certainty for the next 12 or 24 months and protect you if prices rise again. However, if wholesale prices fall in 2026, you could end up paying more than you would have on a standard variable tariff.
When weighing up your options, think about how important price stability is to you. If you prefer certainty over the risk of future increases, a fixed deal near or below the current price cap could be a good choice. On the other hand, if you are comfortable with some risk, you may choose to stay on a variable tariff and benefit from any further falls in the cap.
Remember that the monthly amount you pay by direct debit is usually just an estimate based on your annual usage. Always check the unit rate and standing charge to understand exactly what you are paying for each kilowatt hour of energy.
The next price cap adjustment will take effect on 1 January 2026. Current forecasts suggest a small fall, but the market remains sensitive to global energy prices and events such as a cold winter could push prices back up. Staying informed and regularly reviewing your tariff is the best way to keep your energy costs under control.
In summary, although energy bills have dropped from their peak, they remain high compared to pre-crisis levels. Carefully comparing tariffs, considering whether to fix, and making your home as energy-efficient as possible will help you manage your bills in the months ahead.
Best wishes,
Alex Perrin
Co-founder and CEO, ismybillfair.com