Energy bills are expected to decrease by £117 per year for the average household starting this April. According to Cornwall Insight, the Ofgem price cap is anticipated to drop from £1,758 annually to £1,641 for a standard dual fuel residence. This adjustment is a bit lower than the initial estimate of a £138 reduction.
The decline is attributed to governmental initiatives announced in the autumn Budget last November. Chancellor Rachel Reeves disclosed that £150 would be shaved off energy bills beginning in April by eliminating the Energy Company Obligation (Eco) scheme. Despite this, Cornwall Insight projects a roughly £145 yearly reduction factoring in VAT and pricing allowances.
Furthermore, some expenses related to the upkeep of the UK’s energy networks have offset a portion of these savings. Cornwall Insight noted that wholesale prices have slightly increased due to geopolitical factors, expecting the price cap to remain relatively stable throughout 2026. A slight uptick in energy bills is foreseen in July.
Craig Lowrey, a principal consultant at Cornwall Insight, emphasized the positive impact of bill reductions in alleviating financial burdens amid a crucial period for affordability. He highlighted the role of reduced policy costs due to government interventions in driving these savings, minimizing the impact of minor wholesale cost fluctuations on upcoming bills.
Lowrey stressed the necessity of investments for a more secure and resilient energy system, emphasizing the importance of acknowledging that such a transition will not come without costs. Ofgem is set to announce the next price cap on February 25, covering the period from April 1 to June 30. This cap regulates the maximum charges for gas and electricity unit rates and standing charges.
All households are expected to witness adjustments in their bills from April, irrespective of being on fixed or variable tariffs, as per Uswitch. However, savings will vary based on individual energy consumption, with lower usage households seeing smaller reductions compared to higher consumption households.
A spokesperson from the Department for Energy Security and Net Zero affirmed the government’s commitment to reducing costs by an average of £150 from April 1. Ofgem will unveil the final price cap figure in the customary manner next week.