The energy price cap will rise by 13% from 1 July 2025, adding £157 to a typical household’s annual bill. Ofgem confirmed the increase on Tuesday, pushing the cap to £1,849 for a dual-fuel customer paying by direct debit. That is the highest level since January 2024, and the third consecutive quarterly rise.
As reported by MSN, the regulator blamed higher wholesale gas prices, increased network costs, and the impact of colder weather on demand. For the average household, the rise means an extra £13 a month, but for those on prepayment meters, the increase is steeper still.
Who pays the most, and who can escape
Households in poorly insulated homes will feel the biggest squeeze. A typical three-bed semi with an EPC rating of D uses around 12,000 kWh of gas and 2,900 kWh of electricity a year. At the new cap, that costs roughly £1,849. But a home rated C or above uses 20–30% less energy, cutting the annual bill to around £1,300–£1,500.
The gap is growing. Ofgem’s own data shows that homes rated E or below pay an average of £400 more per year than those rated C. Yet only 40% of UK homes have an EPC rating of C or above, according to the latest English Housing Survey. The rest are leaking heat, and money.
What a typical 3-bed semi can do now
The cheapest fix is loft and cavity wall insulation. The Great British Insulation Scheme offers free or heavily subsidised installation for households on certain benefits or with low EPC ratings. For a typical semi, top-up loft insulation to 270mm costs around £300–£500, but can save £180–£250 a year on heating bills, according to the Energy Saving Trust.
Next, consider solar panels. A 4 kW system costs roughly £5,500–£7,000 installed, but the Smart Export Guarantee pays households 15–20p per kWh exported. With current electricity prices at 28p per kWh under the new cap, a solar array can cut annual bills by £400–£600. The payback period is now under 10 years for most homes.
For those replacing a gas boiler, the Boiler Upgrade Scheme offers £7,500 off an air-source heat pump. Installation costs typically range from £8,000 to £15,000, so the grant brings the upfront cost down to £500–£7,500. Running costs for a heat pump in a well-insulated home are comparable to gas at current prices, and the system adds value to the property.
The catch, and why timing matters
But government grants are not unlimited. The Boiler Upgrade Scheme has a fixed annual budget, and applications can close early if demand surges. The Great British Insulation Scheme also has regional caps. Households that wait risk missing out.
Yet the price cap will not fall soon. Ofgem’s forward wholesale gas curve suggests another rise in October 2025, possibly taking the cap above £1,900. The Energy and Climate Intelligence Unit has warned that UK gas prices remain vulnerable to global supply shocks. Homeowners who act before July can lock in savings before winter.
The calculation is simple: every £1 spent on insulation or renewables today reduces exposure to future price rises. For a home moving from EPC D to C, the annual saving of £300–£500 compounds over a decade to £3,000–£5,000, far more than the typical cost of the upgrade.
What to do by when
Check your EPC rating on gov.uk. If it is D or below, apply for the Great British Insulation Scheme before the autumn rush. For heat pumps and solar, get quotes from at least three MCS-certified installers and apply for grants before September. Households on standard variable tariffs should also compare fixed-rate deals, though few are currently cheaper than the cap.
The July rise is not a surprise. It is a signal. Homes that upgrade now will pay less next winter. Those that do not will pay more, every quarter, until they do.
Frequently Asked Questions
For a typical dual-fuel household paying by direct debit, the rise adds £157 a year, bringing the total to £1,849. Prepayment meter customers will see a slightly higher increase.
Installing loft and cavity wall insulation is the cheapest option, costing £300–£500 and saving £180–£250 a year. The Great British Insulation Scheme may cover the cost entirely for eligible households.
