Millions of households are set to receive notifications this Wednesday regarding the upcoming decrease in their energy bills starting from April. Ofgem, the regulator, periodically revises the price cap every three months, affecting the bills of the majority of customers on standard variable tariffs.
This adjustment considers the £150 discount introduced by Chancellor Rachel Reeves in the Budget to alleviate the financial strain on consumers. Cornwall Insight, an industry expert, projects a decrease of £117 to £1,641 annually for a typical dual fuel household. It is essential to note that the price cap sets the maximum rate energy suppliers can bill for each unit of energy and the standing charge, with the actual bill dependent on consumption.
While the anticipated savings were initially touted at £150 annually, the realistic figure for an average household is closer to £134 due to various factors, including an increase in electricity standing charges. The majority, 98%, of households will experience a reduction in their bills, contingent on their energy usage.
According to the Resolution Foundation, approximately 7.5 million households will save less than £100, while 6.8 million will see savings exceeding £200, and 1.8 million will benefit by over £300. The impact will be more significant for households with higher energy expenditures, such as those with electric heating, larger families, or significant electricity consumption for medical purposes.
Customers who consume less energy but have to pay the daily standing charge regardless may be disappointed by the focus on reducing the unit rate rather than the standing charge. Among the 34 million customers on standard variable tariffs, including six million with prepayment meters, around 21 million are on fixed tariffs and therefore unaffected by Ofgem’s price cap.
Clarification was needed regarding how the announced savings from the Budget would be implemented, with the government confirming that fixed tariff customers can expect these savings starting April 2026. The initial impact of the savings will be most noticeable in the first year but will continue to some extent over three years, albeit diminishing due to the removal of certain policy measures and the continual addition of costs to cover renewable initiatives and customer debts.
Despite these changes, the Resolution Foundation predicts that annual bills will remain approximately £60 lower than current levels until 2029. To access the latest news promptly, consider selecting Daily Mirror as a ‘Preferred Source’ on Google News.