Annual energy bills for millions of households in Great Britain will fall by £117 from April, after Chancellor Rachel Reeves' plan to cut £150 was partly offset by rising network costs. The energy regulator Ofgem's quarterly price cap will drop by 7% to £1,641 a year for the average dual-fuel direct debit customer, down from £1,758 under the current cap.
The reduction follows the November budget, in which Reeves shifted some green energy costs from household bills to general taxation and scrapped a billpayer-funded energy efficiency scheme. However, the savings are smaller than the £150 reduction promised, as her cuts were partly offset by increased costs for maintaining and upgrading the UK's energy networks.
Households on fixed-rate deals, about 40% of the market, will see bigger savings as they avoid the impact of rising grid costs. Without government intervention, bills would have risen for a fourth consecutive quarter despite falling wholesale prices, due to network upgrade costs.
Despite the cap fall, domestic energy costs remain about a third higher than before Russia's invasion of Ukraine, with debt at record levels. Network charges increased by £66 from the last cap, Ofgem said. Keir Starmer stated: 'I know there is more to do and my government is pulling every lever to bear down on the cost of living.'
Ofgem's Tim Jarvis said the reduction is mainly due to policy cost changes announced by the chancellor. However, fuel poverty charity National Energy Action warned bills are 'still far from affordable,' and Citizens Advice noted that for many, high bills are 'an ongoing threat to their financial stability.'
The cap on electricity unit rates will drop by 10.9% to 24.67p per kWh, reflecting cuts to levies for renewable subsidies and the warm home discount. Gas unit rates will fall by 3.2% to 5.74p per kWh due to lower wholesale costs.
