Energy Bills to fall in April after price cap change and charges shake-up
Household energy bills will fall in April after a 7% reduction in the regulator's price cap and a government shake-up of policy charges. The change cuts the annual combined bill for a typical household by about £117 and will be applied automatically for energy used from 1 April.
Ofgem cap drops to £1, 641 and how the figure is calculated
Ofgem has set the quarterly price cap for the three months from April at £1, 641 a year for the average combined gas and electricity bill for those paying by direct debit, a 7% fall from the current January–March cap of £1, 758. The cap is based on a "typical household" using 11, 500 kWh of gas and 2, 700 kWh of electricity a year with a single bill settled by direct debit. Without the government intervention on policy costs, the price cap would have risen in April.
Who will benefit across England, Wales and Scotland and how savings are applied
Nearly everyone in England, Wales and Scotland will benefit from a cut irrespective of their tariff, though amounts will vary between households. For millions on variable tariffs governed by the price cap, the drop will be about £10 a month for those using a typical amount of gas and electricity. The savings for energy used after 1 April will be applied to the unit rate for gas and electricity, and customers do not need to take action—the reductions will be automatically applied from 1 April onwards. Suppliers will contact those on fixed deals in the coming weeks about specific tariff changes.
Government policy changes: ECO, Renewables Obligation and the promised £150
The government announced in the Autumn Budget and November's Budget that it would cut the cost of living by taking an average of £150 off the costs of energy bills from April. That pledge was to be delivered by ending funding for the Energy Company Obligation (ECO) scheme, scrapping an energy efficiency scheme introduced by the Conservatives, and removing 75% of costs for the Renewables Obligation scheme from people’s energy bills, while moving some charges onto general taxation. Those changes are the main driver behind the reduction in policy costs, but rising costs elsewhere have diluted the saving to about £117 for a household using a typical amount of energy.
Network costs, charges and the limits of the saving
The cost of maintaining and strengthening energy networks—including power lines, cables and gas pipes—is rising and has reduced the net benefit to households. Network charges increased by £66 from the last cap, and the cost of running the energy network adds roughly £6 a month for a typical household, diluting the planned £150 fall down to an estimated £117 a year for a household governed by Ofgem's price cap. Domestic energy costs also remain about a third higher than before the war in Ukraine, contributing to record levels of household energy debt.
Fixed deals, variable tariffs and the wider market picture
About 40% of homes are on fixed-rate deals; those households will have the full impact of the government's intervention passed to them by their supplier without the offset from rising grid costs, meaning they should see bigger savings than many on variable deals. The cap affects tens of millions of households: it dictates the maximum suppliers can charge their 29 million household customers for each unit of gas and electricity. Without the government intervention, bills for all households would have climbed for a fourth consecutive quarter, despite falling wholesale energy markets, because of the rising cost of upgrading the grid.
Reactions from ministers, politicians and charities
Chancellor Rachel Reeves said "we're beginning to turn a corner, " adding the government was "putting more money in people's pockets, " and improving public services. Conservative shadow energy secretary Claire Coutinho criticised the move as "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. "
Ofgem's Tim Jarvis, director general of markets, said: "Today’s announcement will be welcome news for many households. Wholesale energy prices have fallen in recent months, and we’re investing in our network to safeguard the future energy system. The main driver of today’s reduction is the change to policy costs announced by the chancellor in the budget. " Peter Smith, a director at National Energy Action, said: "Any fall in sky-high energy bills is welcome. But the new level is still far from affordable. Those on the lowest incomes in the leakiest homes will face deep debt and will still struggle to stay warm and well at home. " Clare Moriarty, chief executive of Citizens Advice, said: "A fall in energy prices is welcome but for many people bills remain stubbornly high. " She also made a longer comment that ends partway through in the provided context: "For millions of households this has stopped being a temporary hardship and become an ongoing threat to their financial stab"—unclear in the provided context.
What consumers should know now
Millions of households will see lower bills, but the exact saving for any household will depend on its size, the type of home, the tariff and how much gas and electricity it uses. High electricity users, which may include vulnerable households with medical equipment, are likely to see the biggest benefit because the discount is primarily applied through a lower price per unit of electricity; households that use little electricity and a lot of gas will benefit the least. Some smaller suppliers were never part of the ECO scheme and their customers have already avoided those costs. Ofgem says it has enforcement powers if suppliers fail to pass on savings, and billpayers are being urged to shop around for further savings.
