Millions of households in Great Britain will see their annual energy bills fall by £117 from April, after Ofgem announced a 7% reduction in its price cap to £1,641 for average dual-fuel direct debit customers, down from £1,758 in the current quarter. The cut provides some relief but is smaller than the £150 reduction promised by Chancellor Rachel Reeves in the November budget, as rising network costs partially offset her intervention.
Reeves shifted some green energy levies from bills to general taxation and scrapped a billpayer-funded efficiency scheme. However, higher charges for maintaining and upgrading the UK's energy grids added £66 to the typical bill, meaning variable tariff customers will see smaller savings. Those on fixed-rate deals, about 40% of the market, will benefit fully from the government's changes without the grid cost impact.
Ofgem's Tim Jarvis 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.' Without government intervention, bills would have risen for a fourth consecutive quarter despite lower wholesale prices.
Despite the drop, energy costs remain about a third higher than before Russia's invasion of Ukraine, pushing domestic energy debt to record levels. Fuel poverty charity National Energy Action noted the new level is 'still far from affordable', while Citizens Advice warned that high bills are an ongoing threat to financial stability. The opposition parties Reform UK and the Conservatives have pledged to cut bills by scrapping net zero policies.
The cap on electricity unit rates will fall 10.9% to 24.67p per kilowatt hour, reflecting lower government levies for renewable subsidies and the warm home discount. Gas unit rates will drop 3.2% to 5.74p per kWh due to falling wholesale costs. Cornwall Energy's Craig Lowrey stressed that the energy transition will not be cost-free, but long-term progress is possible if the transition continues.
