Energy bills for millions of UK households will decrease by £117 per year starting April 1, providing modest relief amid ongoing cost pressures. The energy regulator Ofgem confirms a 7% reduction in the price cap for the quarter ending June 30, lowering the typical annual dual-fuel bill to £1,641 for Direct Debit customers, down from £1,758.
Key Details of the Price Cap Reduction
This adjustment equates to roughly £10 less per month for average households using both gas and electricity. Compared to the same period last year, bills stand more than £200 lower, with an inflation-adjusted drop of 12.3% or £231.
Standing charges will also fall by an average of £13, or 4p daily, following shifts in how certain support schemes like the Warm Home Discount are funded.
Factors Driving the Change
Lower wholesale energy prices, down 6% over the past three months, contribute to the relief. Government budget measures play a pivotal role, removing around £150 in policy costs from bills by reallocating green levies to taxation and scrapping an energy efficiency obligation.
However, rising network costs—up £66 due to infrastructure upgrades—partially offset these gains. Ofgem invests in grid enhancements to support a stable future energy system.
Government Welcomes the News
Prime Minister Keir Starmer states, “Energy bills are at the front of everybody’s mind, and I know they’ve been too high for too long. I promised to bring bills down and I meant it.”
Chancellor Rachel Reeves adds, “Cutting the cost of living is this government’s number one priority.” Energy Secretary Ed Miliband highlights long-term plans, including a clean energy mission and Warm Homes Plan to upgrade millions of properties.
Consumer Impacts and Advice
Tim Jarvis, Ofgem’s Director General for Markets, notes, “Today’s announcement will be welcome news for many households… We’re also seeing encouraging signs of greater engagement and competition, with switching increasing by almost 20% year on year.”
Households on fixed tariffs saved £115 on average last year compared to the cap. Ofgem urges shopping around, considering time-of-use tariffs, or switching to Direct Debit for potential savings up to £131.
Expert Perspectives
Peter Smith from fuel poverty charity National Energy Action comments, “Any fall in sky-high energy bills is welcome, but the new level is still far from affordable.”
Craig Lowrey of Cornwall Energy emphasizes, “Bills aren’t going to drop by two or three hundred pounds overnight, but long-term progress is possible if we stick with the transition.”
Despite the cut, bills remain about a third higher than pre-2022 levels due to global gas market volatility and transition costs.
