Energy bills for millions of households across the United Kingdom are set to fall from April, as the energy price cap is expected to drop by approximately seven per cent. The change follows a Government pledge that average bills will be reduced by £150 through the removal of a long-standing scheme. The announcement, due on Wednesday from the regulator Ofgem, comes at a time when many families continue to face pressure from the cost of living.
According to recent forecasts cited in the report, Ofgem is expected to lower the energy price cap by £117, bringing it to £1,641 per year for a typical dual fuel household from 1 April. In November, Chancellor Rachel Reeves announced that the Government would cut the average household bill by £150 by abolishing the Energy Company Obligation (Eco) scheme, which had been introduced under the previous Conservative administration.
Price Cap Reduction Shaped by Policy Changes and Market Pressures
The anticipated reduction is not described as a straightforward £150 discount applied directly to bills. Instead, the change will primarily be delivered through a lower price per unit of electricity consumed. Households are being advised to monitor communications from their energy suppliers after the official price cap announcement to understand how the adjustment will affect them.
According to analysis from Cornwall Insight, once VAT and pricing allowances within the cap methodology are taken into account, the changes are expected to reduce the cap by roughly £145 annually. The consultancy noted that increases in charges linked to the operation and maintenance of Britain’s energy networks have offset part of the savings. Wholesale prices have also edged up slightly since December, with gas prices described as particularly volatile due to geopolitical factors.
Looking ahead, Cornwall Insight reported that wholesale costs remain below the levels seen when Ofgem set the January cap. It anticipates that the cap will remain relatively steady throughout 2026, with only a small rise forecast in July.
Industry and Consumer Groups Urge Households to Examine Unit Rates Closely
Industry representatives have welcomed the Government’s intervention while emphasising that savings will not be uniform. Ned Hammond, deputy director of customer policy at Energy UK, which represents energy suppliers, said that action taken by the Government to provide a considerable discount on energy bills is “hugely welcome” at a time when many households are struggling.
He added that although the average saving is £150, the discount is applied to the unit rate. As a result, households will experience significantly different savings depending on their energy consumption, with some seeing higher reductions and others lower. He also noted that network charges and wholesale costs mean bills will not necessarily fall in direct proportion to the headline saving. According to his comments, the price cap is projected to drop by around £115 from 1 April.
Consumer advocates have echoed the call for caution. Emily Seymour, energy editor at Which?, said households can expect a significant cut in April, which will bring relief to many facing cost-of-living pressures. She stressed that because most of the change will affect the electricity unit price, individual savings will depend on usage.
Simon Francis, coordinator of the End Fuel Poverty Coalition, urged households to focus on changes in unit rates and standing charges rather than the average bill figure alone. He said that decisions about switching tariffs or suppliers can be overwhelming and argued that Ofgem should ensure tariffs reaching the market are fair and do not discriminate against specific customer groups.
