Millions of households will receive updates on Wednesday regarding the forthcoming reduction in their energy bills starting in April. Ofgem, the regulator, periodically revises the price cap which affects the bills of most customers on standard variable tariffs.
This time, the adjustment includes a £150 discount introduced by Chancellor Rachel Reeves in the Budget to alleviate the financial strain on consumers. Industry experts predict a decrease of £117, leading to an estimated annual bill of £1,641 for the average dual fuel household. It’s important to note that the price cap sets the maximum rates for energy units and standing charges, with the total bill varying based on individual usage.
Despite expectations of a £150 yearly saving, the actual average reduction for households is closer to £134. Additionally, new costs such as increased electricity standing charges will offset some of the savings. Nearly all customers, 98%, will experience a decrease in their bills, with the amount saved dependent on their energy consumption.
The Resolution Foundation estimates that 7.5 million households will save less than £100, while 6.8 million will see savings exceeding £200, and 1.8 million will benefit by more than £300. The largest savings will be seen by households with high energy consumption, including those with electric heating or medical needs.
While the reduction in the unit rate benefits high energy users, those with low consumption might be disappointed as the standing charge remains unchanged. Approximately 34 million customer accounts are on standard variable tariffs, with around 21 million on fixed tariffs unaffected by the price cap.
Following initial confusion, the government clarified that customers on fixed tariffs can expect the savings to reflect in their bills from April 2026. The most significant impact will be felt in the first year, with some residual effects over the next three years, though subsequent cost additions may mitigate the savings.
Despite ongoing changes in policy measures and additional costs, the Resolution Foundation predicts that annual bills will stay approximately £60 below current levels until 2029.