Energy bills are projected to decrease by £117 annually for the average household starting this April. According to Cornwall Insight, the Ofgem price cap is expected to drop from £1,758 per year to £1,641 for a standard dual fuel residence. This revision is slightly lower than the previously anticipated £138 reduction.
The reduction is attributed to initiatives announced by the Government during last November’s Budget. Chancellor Rachel Reeves disclosed that £150 would be shaved off energy bills from April by eliminating the Energy Company Obligation (Eco) scheme. However, Cornwall Insight noted that the actual decrease would be around £145 per year after factoring in VAT and pricing allowances.
Certain charges related to the upkeep of Britain’s energy networks have partly offset these savings. Cornwall Insight highlighted that wholesale prices have slightly increased due to geopolitical factors, forecasting a relatively stable price cap throughout 2026 with a potential small rise in energy bills by July.
Craig Lowrey, principal consultant at Cornwall Insight, emphasized the positive impact of bill reductions, particularly during times of financial strain. He credited the drop in policy costs, driven by government interventions, for the bulk of the reduction, downplaying the minimal effect of wholesale cost fluctuations on upcoming bills.
Lowrey stressed the necessity of investing in a secure and resilient energy system, especially after recent vulnerabilities exposed by global energy market dynamics. He urged for transparent discussions acknowledging that transitioning to such a system will come with associated costs.
Ofgem is set to reveal the next price cap on February 25, covering the period from April 1 to June 30. The price cap determines the maximum charges for gas and electricity unit rates and standing charges, though individual bills are still based on actual energy consumption.
Uswitch mentioned that all households will witness adjustments in their bills from April, regardless of their tariff type. However, the savings will vary based on energy usage, with lower-consuming households seeing lesser reductions compared to higher-usage ones.
A spokesperson from the Department for Energy Security and Net Zero affirmed the government’s commitment to reducing bills by an average of £150 starting April 1. Ofgem is expected to finalize the price cap details in the coming week.
