Energy Bills to fall in April after price cap cut and charges shake-up

Typical household energy bills will fall in April after a 7% drop in the regulator’s price cap and a government shake-up of policy charges. The change will reduce bills for millions, but rising network costs and other pressures mean the savings are smaller than originally promised.

Ofgem cap falls 7% to £1, 641; typical bill drops £117

The quarterly price cap will fall by 7% for the three months from April, dropping to £1, 641 a year for a household using a typical amount of gas and electricity, down from £1, 758 under the January–March cap. For a household governed by the price cap and using a typical amount, that represents an annual fall of £117.

For millions on variable tariffs governed by the cap, the fall equates to about £10 a month for those using a typical amount of gas and electricity.

Chancellor Rachel Reeves’s Budget measures — scrapping Eco and a £150 pledge

In November’s Budget the chancellor announced changes to policy costs aimed at cutting energy bills by an average of £150 a year from April. The plan included scrapping the Energy Company Obligation scheme and moving some charges onto general taxation.

The government also said it would remove 75% of costs for the Renewables Obligation scheme from people’s energy bills. billpayers will start benefitting from an average of £150 off the costs of energy bills from April onwards.

Rachel Reeves said, "we're beginning to turn a corner, " and that the government was "putting more money in people's pockets, " and improving public services.

Who benefits: England, Wales and Scotland, fixed deals and supplier duties

Nearly everyone in England, Wales and Scotland will see a reduction regardless of tariff, though the amounts will vary between households. The savings will apply to all households, but the exact amount depends on how much energy is used and the type of tariff.

About 40% of homes are on fixed-rate deals. Changes to policy costs will also mean a reduction in bills for those on fixed deals; suppliers will contact fixed customers in the coming weeks about the specific change to their tariff. Ofgem has enforcement powers if suppliers fail to pass on savings to these customers.

Some smaller suppliers were never part of the Energy Company Obligation scheme, meaning their customers have already benefited from not paying those costs.

Savings applied to unit rates and favour high electricity users

For energy used after 1 April, the savings will be applied to the unit rate for gas and electricity and will be automatically applied to bills from 1 April onwards. The discount on each household's individual bill will depend on household size, type and usage.

The lower price will be applied primarily through a reduced price per unit of electricity. That means high electricity users — which may include vulnerable households with medical equipment — are likely to see the biggest benefit, while households that use little electricity but a lot of gas will benefit the least.

Network costs, higher bills and mounting debts dilute the impact

Officials warned the April saving is smaller than the £150 originally promised because the cost of running and strengthening energy networks has risen. Network charges increased by £66 from the last cap, and the cost of maintaining and upgrading networks is adding around £6 a month for a typical household, which dilutes the overall saving.

Domestic energy prices remain about a third higher than before the war in Ukraine, and bills have stayed high since then, pushing energy debts to record levels. Gas market prices remain inflated in part because of the cost of importing more gas by tanker from the US and the Middle East and because of the higher costs of the energy transition.

Officials emphasised that, without the government intervention on policy costs, the price cap would have risen in April. Tim Jarvis, director general of markets at Ofgem, said the change to policy costs announced by the chancellor was the main driver of the reduction and noted wholesale energy prices have fallen in recent months while investment in the network continues.

Opposition figures said the move shifts costs onto taxation rather than delivering the full promised cut. Claire Coutinho said Labour was "pulling the wool over people's eyes by moving some costs off of your energy bill and putting them straight onto your tax bill. " Keir Starmer said, "I know there is more to do and my government is pulling every lever to bear down on the cost of living and protect the pound in the pockets of working people. "

Charity and advice bodies warned the new level remains unaffordable for many. Peter Smith of National Energy Action said any fall is welcome but that the new level is still far from affordable and that those on the lowest incomes in the leakiest homes will still struggle and face deep debt. Clare Moriarty of Citizens Advice commented that a fall in energy prices is welcome but that for many people bills remain stubbornly high; part of her comment is unclear in the provided context.

Note: savings and changes above apply from 1 April and reflect the figures and announcements contained in this briefing.