Energy bills are still mental compared to a few years ago, but at least they're not as bad as they were in 2022. The price cap is back to doing what it's supposed to do - protecting us from the worst of the market volatility.
But understanding your energy bill is still like trying to decode ancient hieroglyphs. Let me break it down for you.
What Is the Price Cap?
The price cap isn't a cap on your total bill - it's a cap on how much suppliers can charge per unit of energy. Think of it as a maximum price list rather than a spending limit.
Ofgem (the energy regulator) reviews it every three months and sets the maximum prices based on wholesale energy costs, network charges, and supplier margins.
2025 Price Cap Rates
For the first quarter of 2025, the price cap rates are:
Electricity:
- Unit Rate: 24.5p per kWh
- Standing Charge: 60.99p per day
Gas:
- Unit Rate: 6.24p per kWh
- Standing Charge: 31.43p per day
These rates give a typical household an annual bill of around £1,928 for typical usage (2,700 kWh electricity, 11,500 kWh gas).
Breaking Down Your Bill
Your energy bill has two main parts:
Unit Charges
This is what you pay for the energy you actually use, measured in kilowatt hours (kWh). It's like paying for petrol - the more you use, the more you pay.
Standing Charges
This is a fixed daily charge that covers the cost of maintaining the pipes and wires that bring energy to your home. You pay this even if you don't use any energy.
Example Monthly Bill:
Electricity:
Usage: 300 kWh × 24.5p = £73.50
Standing charge: 30.44 days × 60.99p = £18.56
Total: £92.06
Gas:
Usage: 1,000 kWh × 6.24p = £62.40
Standing charge: 30.44 days × 31.43p = £9.57
Total: £71.97
Combined monthly bill: £164.03
Why Your Bill Might Be Different
The price cap is just the maximum. Your actual bill depends on:
Your Usage
The "typical" usage figures are just averages. If you're home all day with the heating on, you'll use more. If you're out at work and have good insulation, you'll use less.
Your Tariff
The price cap only applies to standard variable tariffs. If you're on a fixed deal, Economy 7, or a green tariff, your rates will be different.
Your Payment Method
Prepayment meters have slightly different rates. Direct debit is usually the cheapest way to pay.
Your Region
There are slight regional variations in the price cap rates depending on your distribution network operator.
How to Reduce Your Bills
You can't control the unit rates, but you can control how much you use:
Heating
- Turn your thermostat down by 1°C (saves about 10% on heating costs)
- Use thermostatic radiator valves to heat only the rooms you're using
- Bleed your radiators so they work efficiently
- Close curtains when it gets dark to keep heat in
Hot Water
- Take shorter showers (a 4-minute shower uses about half the energy of a bath)
- Fix dripping taps - hot water drips waste energy
- Wash clothes at 30°C instead of 40°C
- Only boil as much water as you need
Appliances
- Turn off devices at the wall, not just standby
- Use LED bulbs - they use 80% less energy than old bulbs
- Keep your fridge and freezer full but not overcrowded
- Use the microwave instead of the oven for small meals
Should You Switch Suppliers?
The switching market is pretty quiet right now. Most suppliers are charging at or very close to the price cap rates because their costs are similar.
But it's still worth checking occasionally. You might find:
- Slightly cheaper rates
- Better customer service
- Green energy options
- Fixed deals (if you want price certainty)
Just be careful with fixed deals. If wholesale prices fall, you could end up paying more than the price cap.
Getting Help with Bills
If you're struggling with energy bills, there's help available:
Government Support
- Warm Home Discount: £150 off your bill if you're on certain benefits
- Winter Fuel Payment: £200-£300 if you're over pension age
- Cold Weather Payments: £25 for each week of very cold weather
Supplier Support
- Payment plans to spread costs
- Hardship funds for emergency help
- Free energy efficiency advice
- Priority services if you're vulnerable
Energy Efficiency Schemes
- ECO scheme: Free insulation and heating upgrades
- Local authority grants: Check your council's website
- Boiler upgrade scheme: Grants for heat pumps
What's Next for Energy Bills?
Energy bills are still way higher than they were before 2022, but they're more stable now. The price cap is reviewed every three months, so your bills might go up or down slightly.
The long-term trend is probably upward as we transition to renewable energy, but the massive spikes we saw in 2022 are hopefully behind us.
The government is also pushing heat pumps and other green technology, which should reduce bills in the long run but might cost more upfront.
Use Our Calculator
If you want to work out what your bills should be, use our energy bill calculator. It's based on the latest price cap rates and will give you a realistic estimate of your monthly costs.
Just remember - these are estimates. Your actual usage might be different, especially in winter when you're using more heating.
The cheapest energy is the energy you don't use.