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Events in Russia and the Middle East are contributing to global energy market volatility, making future energy costs for British households uncertain.
This guide provides up-to-date information to help you decide whether fixing energy prices for 2025 is the best option.
Fixing energy prices protects you from future price increases but prevents you from taking advantage of any price reductions.
If you’re considering fixing your energy bills for 2025, the key question is whether prices are likely to fall next year.
On 1 January, the price cap is set to rise by 1.2%, equating to an increase of approximately £2 per month for the average British household. Market analysts then predict the price cap will remain largely stable in the second quarter of 2025.
Below are the current price caps for the average household and the forecasted rates for early 2025, according to industry analysts:
Read on for more information about the energy price cap.
The energy price forecasts quoted above are based on the best estimates from industry analysts.
However, it’s important to recognise the inherent uncertainty in these forecasts. Changes in the conflicts in Ukraine and Israel, or even this winter’s weather, can drastically affect energy prices.
Fixing energy prices will protect you from any price rises due to unexpected geopolitical events.
Energy prices remain approximately double the historical average of the past decade and are expected to stay elevated for the foreseeable future.
Electricity and gas prices continue to feel the impact of geopolitics, notably the conflict in Ukraine, which has caused a scarcity of natural gas on the European continent, thus raising the wholesale cost of gas.
In Great Britain, both the electricity and gas networks rely on gas imports to meet demand, meaning that our energy price also remains high.
Fixing energy prices at the right time allows you to benefit from cheaper prices offered by suppliers looking to attract new customers. It also locks in those rates, protecting you against future price volatility.
But for both homes and businesses, people are asking – is now the right time to fix energy prices?
The answer depends on whether you need energy for your home or business. Continue reading for our detailed answer to both.
Households that have not fixed their energy prices are on a default energy tariff, with rates determined by the energy price cap.
The price cap will rise by 1.2% in the first quarter of 2025, and industry analysts predict that rates will remain at this level into early summer 2025.
We recommend fixing your household energy prices if you find a deal significantly cheaper than the current price cap. Use our energy comparison tool to explore the deals available today.
The best deals in the market can currently save you over £100 per year compared with the current price cap.
Businesses do not benefit from a price cap, which means out-of-contract tariffs tend to be uncompetitive and needlessly expensive.
All government support during the energy crisis ended on 1 April 2024. We, therefore, recommend reviewing your current arrangements to see how much you could save with a fixed business energy tariff.
Compare the latest business electricity prices and commercial gas rates to make an informed decision.
Use our business energy comparison service to get the best prices offered by our panel of energy suppliers.
As we’ve discussed above, fixing your energy prices provides:
However, there is another key reason why most people choose fixed contracts: Energy suppliers offer their best deals as fixed contracts to attract new customers.
With a fixed deal, an energy supplier secures a new customer for at least a year, which is great for growing their business. Suppliers compete to offer the lowest fixed energy prices to attract the most new customers.
Find out how much you could save today by fixing energy prices.
Business energy suppliers want to retain their customers and typically offer a fixed rate renewal quote to customers approaching the end of their business energy contract.
We recommend not blindly accepting the renewal rates offered by your supplier but instead comparing them to those offered by alternative suppliers. Using our commercial electricity and business gas comparison services, you can assess whether your renewal quote is a fair offer.
The energy price cap limits how much energy suppliers can charge for electricity and gas with a variable tariff. It acts as a maximum price limit for energy suppliers.
The current price cap is £1,717 for the average UK home until 31 December 2024.
💡Unlike domestic consumers, there is no business energy price cap, which means that variable business energy contracts can be needlessly expensive.
The energy price cap applies to domestic standard variable (default) tariffs.
The energy price cap applies to all payment arrangements:
The energy price cap applies to variable tariffs on single-rate energy meters and dual-rate economy 7 meters.
On 23 August 2024, Ofgem announced that the energy price cap for 1 October 2024 to 31 December 2024 would be set at £1,717 per year for the average household on a default tariff.
The typical energy unit prices during this period are as follows:
Source: Ofgem
Note that the exact price cap rates depend on your home’s (1) location and (2) payment method. Enter these into our finder below to find the exact price cap rates that apply to you
On 22 November 2024, Ofgem announced that the energy price cap for the average household on a default tariff from 1 January 2025 to 31 March 2025 would be £1,738 per year.
The typical energy unit prices during this period will be as follows:
Source: Ofgem – Energy price cap rates
Ofgem sets the energy price cap at a rate that allows suppliers to compete effectively and encourages customers to compare energy suppliers and switch to the most competitive tariffs.
The energy price cap is calculated based on the underlying cost of supplying electricity or gas, plus an allowance for the profit of energy suppliers.
Here’s a breakdown of the separate costs incurred by energy suppliers that are included within the price cap: