Energy bills are projected to decrease by an average of £117 per year for households starting this April. According to Cornwall Insight, the Ofgem price cap is anticipated to drop from £1,758 annually to £1,641 for typical dual fuel homes. This adjustment is slightly lower than Cornwall Insight’s previous estimate of a £138 reduction.
The reduction in energy bills is attributed to measures announced by the Government in the November Budget. Chancellor Rachel Reeves disclosed that £150 would be trimmed from energy bills in April by eliminating the Energy Company Obligation (Eco) scheme. However, after factoring in VAT and pricing allowances, Cornwall Insight suggests the actual reduction will be around £145 per year.
In addition, Cornwall Insight noted that certain charges related to maintaining Britain’s energy networks partly offset these savings. The group mentioned that wholesale prices have slightly increased due to geopolitical factors, and they foresee the price cap remaining relatively stable throughout 2026. A small uptick in energy bills is predicted for July.
Craig Lowrey, a principal consultant at Cornwall Insight, emphasized the positive impact of bill reductions on easing financial pressure. He highlighted the role of Government interventions in lowering policy costs, stating that while wholesale costs have been in the spotlight recently, their impact on upcoming bills is minimal.
Lowrey stressed the necessity of investment for a more secure and resilient energy system, acknowledging that transitioning comes with costs. 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 maximum charges for gas and electricity unit rates and standing charges, but does not impose a total cap on energy costs based on usage.
Uswitch pointed out that all households will experience bill adjustments from April, irrespective of their tariff type. They highlighted that the reduction in bills will vary based on individual energy usage, with lower usage households seeing smaller savings compared to higher usage households.
A spokesperson for the Department for Energy Security and Net Zero affirmed the Government’s commitment to reducing average costs by £150 from April 1. Ofgem is scheduled to finalize the price cap figure in the upcoming week.