Gas and electricity prices forecast
Since the introduction of Ofgem's energy price cap in January 2019, most suppliers have based energy prices of their default or standard variable rate tariffs on the unit rates capped by the price cap.
In September 2021, the price of wholesale energy rose to a point where it became untenable for suppliers to keep offering deals at the rates they had been. This meant that the prices of fixed energy deals soared to the point that most of them became much more expensive than the capped standard variable tariffs, even at the then price cap level of £1,277.
In 2025, prices are predicted to generally stay at a higher level than seen in 2024.
The price cap is set at £1,720 from 1 July to 30 September. This was the first drop in a while after three consecutive increases, but it's difficult to tell what will happen in the future.
Are energy prices going down?
Yes - the price cap has been lowered by 7%. However, prices often rise during the colder months, so we may see a rise in the autumn.
The energy market is extremely unpredictable, so it's difficult to be certain. It's best to stay as close as possible to market developments so you have the most up-to-date information.
What's the average UK energy bill?
There's no such thing as an "average" UK energy bill because everyone's unit rates and standing charges will differ slightly (by plan and by region), and everyone's energy usage is different.
| Electricity | Gas | |
|---|---|---|
| Unit rates | 25.73p per kWh | 6.33p per kWh |
| Standing charge | 51.37p per day | 29.82p per day |
Why are energy prices so high?
Several factors can cause suppliers' gas and electricity prices to go up or down.
Market forces can cause the wholesale price of gas to rise or fall which then has a knock-on effect on energy bills. This is why prices increased so dramatically throughout 2021 and 2022. However, wholesale gas prices aren't always the cause of energy price changes.
The energy price cap
In recent years, the most significant gas and electricity price rises and cuts have been in reaction to changes in Ofgem’s energy price cap, which is reviewed and updated four times a year. But how can a cap change the prices suppliers are allowed to charge?
The cap was first introduced in January 2019 and limits the amount that suppliers can charge for their default gas and electricity tariffs. However, because the cap was dictated by wholesale energy prices, customers have felt the brunt of suppliers' rising costs with their tariff prices increasing as a result.
Limited energy supply
Gas is pumped out of the ground and electricity is mostly generated using a mix of fossil fuels like oil, gas and coal. These are all natural supplies, which are costly to get hold of, and more importantly, in limited supply.
Despite there being a limited supply of fossil fuels, the technology to find and extract them has advanced significantly and has meant that there is no shortage of gas and electricity.
The limited supply of fossil fuels could impact gas and electricity prices if energy companies were looking very far ahead into the future, but in the short-to-medium term, supply should not be a factor.
Global conflicts
Wars in oil-rich countries and conflicts between countries over gas pipelines can impact wholesale prices. For example, wholesale gas prices in the UK have spiked when supplies in Ukraine, Iraq and Syria have been threatened in recent years.
For the most part, these spikes have been temporary, and the supply of gas and electricity has remained constant in the UK throughout these conflicts, so it isn’t the ultimate factor.
UK energy providers
There are some arguments that energy providers could afford to keep prices low but instead choose to maximise profits by raising prices. However, the industry regulator Ofgem aims to provide transparency in the way the sector prices its gas and electricity. Ofgem also aims to keep the market competitive to ensure that consumers get the fairest price possible. You can go to the Ofgem website to see how much profit suppliers make each year.
To some degree, all of the above arguments could have some impact on your energy prices, but consumers can take back control by switching.
Is it worth comparing gas and electric prices?
Yes - if you're on a standard variable tariff, you can almost certainly make savings by switching to a fixed deal.
It's a good idea to run an energy comparison to see what's available (whether you decide to switch to a fixed deal or stay on a standard variable tariff). There are deals available which could save around £150 based on the current price cap, which would then save even more if the price cap goes up in the next few months.
Otherwise, the best option is to try and manage energy usage around the home in order to keep bills as low as possible. Uswitch's mobile app can help.
I've never switched energy before - how does it work?
It's a simple process to switch energy supplier. Here's what you need to hand:
- Your postcode
- Your plan name.
That's it! We'll do the rest, including comparing top deals in your area, and providing savings figures, customer ratings, and the ability to filter by preferences including green plans and more.
For step-by-step instructions on how to switch energy suppliers after a price rise, read our dedicated guide about how to switch supplier for gas and electricity here.
Run an energy comparison
Click here to compare energy prices and get started on your energy switch.
What makes energy cheaper?
Because energy suppliers have to keep the cost of their standard variable tariffs within the price cap, their prices can drop when the cap rate is reduced. This has happened several times since the introduction of the cap - where the price cap rate has fallen, suppliers have been forced to drop their energy prices too. It's important to remember though that the price cap only applies to suppliers' standard variable tariffs, with most fixed deals being much cheaper to start with.
Another element is competition. Energy suppliers need your custom to be profitable. If their customers leave because there's a cheaper energy provider or one with better service, then they lose out.
FAQs
Should I fix my energy prices?
If you're not on a fixed deal, it's very likely you can save a significant amount by switching to one. There are deals that save about £150 versus the price cap, so run an energy comparison to see what's available.
Why is electricity so expensive in the UK?
Unfortunately, the volatility of the energy market and the rise in price of wholesale gas has had a knock-on effect for the price of electricity. This is because the main method of electricity generation is gas-fired, so when it costs more to use the gas, it costs more to generate the electricity and those costs are then passed on to customers.
