Energy Bills to fall by 7% in April after government charges shake-up
The price cap that governs many household energy bills will fall by 7% from April, cutting the typical capped annual dual-fuel bill to £1, 641 and reducing bills for millions of households after the government reallocated several policy charges.
What the change means for typical bills
The regulator has set the average annual direct-debit dual-fuel bill for a typical household at £1, 641 from April, down from £1, 758, a drop that works out at roughly £10 a month for many households using a typical amount of gas and electricity. For households on Ofgem’s price cap that use the defined typical consumption — 11, 500 kWh of gas and 2, 700 kWh of electricity a year with a single bill settled by direct debit — the annual bill will fall by £117.
Energy Bills: which charges moved and why
The reduction follows government measures announced in the Autumn Budget to take an average of £150 off energy bills by ending funding for the Energy Company Obligation (ECO) scheme and removing 75% of costs for the Renewables Obligation from people’s energy bills. The saving is smaller in cash terms for a typical capped household because costs of running and strengthening the energy networks have risen.
Unit rates, standing charges and wholesale trends
From 1 April, the maximum rate for direct-debit customers will change for electricity from 28p per kWh to 25p per kWh; the gas unit rate remains at 6p per kWh in the figures set out. Average daily standing charges are being adjusted: electricity standing charges move from 54. 75p to 57. 21p, and gas standing charges move from 35. 09p to 29. 09p, shifting the combined daily total from almost 90p to just over 86p. Ofgem said wholesale prices have been stable and down 6% over the past three months, but that improvement has been partially offset by a rise in the cost of maintaining and upgrading power lines, cables and gas pipes — adding about £6 a month for a typical household and reducing the net saving.
Who benefits and who may see less change
The discount applied to bills will vary by household size, tariff type and energy usage. The measures lower the unit price of electricity used, so high electricity users — which may include vulnerable households that rely on medical equipment — are likely to see the biggest benefit. Households that use relatively little electricity and more gas will tend to gain less. Some customers of smaller suppliers have already benefited because smaller companies were exempt from ECO and never charged those costs.
Fixed deals, customer contact and enforcement
About 40% of homes are on fixed deals. The government changes to policy charges will also reduce bills for many customers on fixed tariffs; suppliers will contact affected customers in the coming weeks to explain how specific deals change. The regulator says it has enforcement powers if suppliers fail to pass on the savings to fixed‑deal customers.
What ministers and critics said
Chancellor Rachel Reeves said the move showed the government was "we're beginning to turn a corner, " adding it was "putting more money in people's pockets, " and improving public services. Conservative shadow energy secretary Claire Coutinho accused the government of "pulling the wool over people's eyes by moving some costs off of your energy bill and putting them straight onto your tax bill. "
Industry and consumer figures also reacted. Richard Neudegg described the budget decision to remove some levies from consumer bills as the main driver of the price drop, while consumer campaigner Martin Lewis said most fixed deals would fall by 7% to 9% in April and that it was "most", not all, deals because some smaller companies were exempt from ECO.
Ofgem has confirmed the cap change will be applied from 1 April and that savings for energy used after that date will be reflected in unit rates; customers do not need to take any action to receive the automatic reductions. The regulator will monitor supplier pass-through in the weeks after the change.
