Average households are expected to see a decrease in energy bills by £117 annually starting this April. According to Cornwall Insight, the Ofgem price cap for a typical dual fuel home is anticipated to drop from £1,758 to £1,641 per year. This adjustment is slightly lower than the initial estimate of a £138 reduction by the group.
The reduction is attributed to Government initiatives announced in the November Budget. Chancellor Rachel Reeves disclosed plans to cut £150 from energy bills by eliminating the Energy Company Obligation (Eco) scheme in April. However, after factoring in VAT and pricing allowances, Cornwall Insight estimates the actual reduction to be around £145 per year.
Despite these savings, operational and maintenance charges for the UK’s energy networks have partially offset the benefits. Cornwall Insight highlighted a slight increase in wholesale prices due to geopolitical factors and expects the price cap to remain stable throughout 2026, with a potential small rise in energy costs in July.
Craig Lowrey, a principal consultant at Cornwall Insight, emphasized the positive impact of bill reductions on household finances, crediting Government interventions for the substantial policy cost decrease. Lowrey stressed the necessity of investment for a more secure energy system, acknowledging the costs associated with transitioning to a more resilient system.
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 unit rates and standing charges for gas and electricity, while individual energy usage continues to determine the total bill amount. Uswitch noted that all households, regardless of tariff type, will experience billing adjustments in April.
A spokesperson from the Department for Energy Security and Net Zero affirmed the Government’s commitment to reducing energy costs by £150 on average from April 1. Ofgem will release the final price cap details in the upcoming week.