Millions of households in Great Britain will see their annual energy bills fall by £117 from April, after the energy regulator Ofgem announced a 7% reduction in its quarterly price cap. The cap will drop to £1,641 a year for the average combined gas and electricity bill for those paying by direct debit, down from £1,758 under the current cap. This follows the November budget, in which the chancellor 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 by Rachel Reeves, as her cuts were partly offset by rising costs of maintaining and upgrading the UK's energy networks. The savings will apply to all households, but their impact will vary depending on energy usage and tariff type. About 40% of households on fixed-rate deals will see bigger savings than those on variable tariffs, as they will benefit fully from the government's intervention without the impact of rising grid costs.
Without government intervention, energy bills would have risen for a fourth consecutive quarter despite falling wholesale prices, due to the rising cost of grid upgrades. Despite the cap reduction, domestic energy costs remain about a third higher than before Russia's invasion of Ukraine, and network charges increased by £66 from the last cap. Ofgem's Tim Jarvis noted that the reduction is driven by changes to policy costs announced in the budget.
Charities have welcomed the fall but warned that bills remain unaffordable for many. Peter Smith of National Energy Action said those on low incomes in inefficient homes will still struggle, while Clare Moriarty of Citizens Advice described high bills as an ongoing threat to financial stability. The cost of electricity in the UK, among the highest in the developed world, has become a key political issue, with opposition parties pledging to cut costs by scrapping net-zero policies.
