Price cap: Energy bills set to plummet from April – what it means for you

Rachel Reeves said last November that £150 would be cut from the average household bill from April

Households are poised to see their energy bills fall by approximately 7 per cent from April, following a government pledge for an average £150 reduction.

Industry predictions suggest energy regulator Ofgem will announce a £117 cut to the energy price cap on Wednesday, bringing the annual cost for a typical dual fuel household down to £1,641 from 1 April.

This anticipated reduction aligns with earlier government indications of a £150 saving, partly achieved by discontinuing the Energy Company Obligation (Eco) scheme, originally introduced by the Conservative government.

However, consumers are cautioned not to anticipate a straightforward £150 discount, as the actual saving will fluctuate depending on household size, type, and energy consumption. The primary method for this reduction is expected to be a lower price per unit of electricity.

Households are advised to await information from their suppliers following the cap announcement for specific details.

Energy analysts Cornwall Insight project the changes will ultimately reduce the cap by around £145 annually, once VAT and other pricing allowances within the cap methodology are considered.

Rachel Reeves (Yui Mok/PA)

It added that increases in charges associated with the operation and maintenance of Britain’s energy networks have offset part of the savings.

Wholesale prices had also risen slightly since its last forecast in December, with the cost of gas particularly volatile due to “geopolitical factors”.

Looking further ahead, Cornwall said wholesale costs were still lower than when Ofgem set the January cap level and it expected the cap to remain “relatively steady” throughout 2026, “with only a small rise forecast in July”.

Ned Hammond, deputy director of customer policy at Energy UK, which represents firms, said: “At a time when many households are struggling with their bills, action taken by the Government to provide a considerable discount on energy bills is hugely welcome.

“While the saving will be £150 for the average household, it is important to note that the discount is applied to the unit rate. Therefore, households will experience significantly different savings depending on their energy consumption, some much higher and others substantially lower than £150.

“In addition, other moving parts, such as network charges and wholesale costs, mean energy bills will not necessarily fall in line with the saving provided. Indeed, the price cap is projected to drop by around £115 from 1 April.”

Which? energy editor Emily Seymour said: “Households can expect a significant cut to their energy bills in April, which will come as a relief to millions of people struggling with cost-of-living pressures.

“The bulk of this change is expected to be applied to your electricity price per unit, so your exact savings will depend on your usage; look out for communications from your energy provider in the coming weeks to see how it will affect your bills.”

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, urged households to note the changes in unit costs and standing charges, rather than focus on the headline “average energy bill”.

He said: “We know that energy bills can be confusing and trying to decide when to switch tariffs or change supplier is a big decision which can overwhelm people.

“As well as setting the price cap, Ofgem should play a greater role in ensuring that the tariffs reaching the market are fair and don’t discriminate against specific customer groups.

“Sadly the responsibility currently falls to households to pay careful attention to any changes in their unit costs and standing charges.”