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 anticipated to drop from £1,758 per year to £1,641 for a standard dual fuel residence. This adjustment is slightly lower than the previous estimate of a £138 reduction.
The reduction is attributed to governmental measures announced in the autumn Budget last November. Chancellor Rachel Reeves disclosed that £150 will be trimmed from energy bills from April by discontinuing the Energy Company Obligation (Eco) scheme. However, Cornwall Insight states that the actual decrease will be around £145 per year after factoring in VAT and pricing allowances.
Despite these savings, certain charges related to the upkeep of Britain’s energy networks have offset a portion of the benefits. Cornwall Insight highlighted that wholesale prices have experienced a slight increase due to geopolitical influences, leading to an expectation of a relatively stable price cap throughout 2026. The group foresees a minor rise in energy bills in July.
Craig Lowrey, principal consultant at Cornwall Insight, emphasized the positive impact of bill reductions in alleviating financial strain on consumers. He pointed out that the drop in policy costs, driven by government interventions, is the primary factor behind the reduction, while the effect of wholesale costs on April’s bills is minimal.
Highlighting the need for investment in a more secure and resilient energy system, Lowrey stressed that transitioning to such a system will come with associated costs. Ofgem is scheduled to announce the next price cap on February 25, covering the period from April 1 to June 30, regulating unit rates of gas and electricity as well as standing charges.
All households are expected to observe adjustments in their energy bills from April, irrespective of being on fixed or variable tariffs. Uswitch cautioned that the forthcoming reduction will be contingent on personal energy usage, with lower-energy users experiencing smaller savings compared to higher-energy consumers.
A spokesperson from the Department for Energy Security and Net Zero affirmed the government’s commitment to reducing costs for consumers by £150 from April 1. Ofgem will disclose the final price cap figure in the usual manner next week.