Energy bills are anticipated to decrease by £117 per year for the average household starting this April. According to Cornwall Insight, the Ofgem price cap is projected to drop from £1,758 annually to £1,641 for a standard dual fuel residence. This adjustment is slightly lower than the initial forecast of a £138 reduction.
The reduction is attributed to government initiatives announced in the November Budget last year. Chancellor Rachel Reeves disclosed a plan to slash £150 from energy bills in April by eliminating the Energy Company Obligation (Eco) scheme. Despite this, Cornwall Insight estimates the actual decrease to be around £145 per year after factoring in VAT and pricing allowances.
Moreover, Cornwall Insight highlighted that certain charges related to the upkeep of Britain’s energy networks have partially offset these savings. The group also noted a slight increase in wholesale prices due to geopolitical factors, projecting a relatively stable price cap throughout 2026 with a potential slight rise in energy bills in July.
Craig Lowrey, principal consultant at Cornwall Insight, emphasized the positive impact of bill reductions in alleviating financial stress, mainly driven by the drop in policy costs from government interventions. He underscored the necessity of investment for a more secure energy system, acknowledging that transitioning will come with associated costs.
Ofgem is set to announce the next price cap on February 25, covering the period from April 1 to June 30. The price cap regulates the maximum charges for gas and electricity unit rates, as well as standing charges, without imposing a total cap on energy costs based on usage.
All households are expected to witness adjustments in their bills starting April, regardless of their tariff type, as indicated by Uswitch. However, the actual saving will vary based on individual energy consumption, with lower-energy households seeing smaller reductions compared to higher-energy users.
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, with Ofgem determining the final price cap figures in the upcoming week.