Millions of households in Great Britain will see their annual energy bills drop by £117 from April after Ofgem lowered its price cap by 7 per cent to £1,641 for typical dual-fuel direct debit customers. The reduction from the current cap of £1,758 follows the chancellor’s decision in the November budget to shift some green levies from bills to general taxation and scrap a billpayer-funded efficiency scheme.
However, the saving is smaller than the £150 cut promised by Rachel Reeves, because rising network charges – up £66 since the last cap – partly offset the policy changes. Households on fixed-rate tariffs, about 40 per cent of the market, will benefit more fully from the government’s intervention, while those on variable deals will see a smaller net reduction.
Without the government’s action, bills would have risen for a fourth consecutive quarter despite falling wholesale costs, due to the rising expense of upgrading the UK’s energy grids. Despite the drop, domestic energy costs remain about a third higher than before Russia’s invasion of Ukraine, contributing to record levels of household debt.
Ofgem’s director general of markets, Tim Jarvis, said the reduction was “welcome news” driven by lower wholesale prices and the chancellor’s policy changes. But charities warned that bills are still unaffordable for many. Peter Smith of National Energy Action said: “The new level is still far from affordable. Those on the lowest incomes will face deep debt.”
Citizens Advice chief executive Clare Moriarty added that for millions, high bills are “an ongoing threat to their financial stability”. Meanwhile, Cornwall Insight’s Craig Lowrey cautioned that the energy transition “will not be cost‑free”, but that long-term progress is possible if the transition continues.
