Price Cap Cut Brings April Relief
Typical household energy bills across England, Wales and Scotland will fall by 7% from April, according to regulator Ofgem. The reduction follows government changes to how certain energy policy costs are charged.
For households on variable tariffs covered by the price cap, the annual bill for a typical dual-fuel home will drop by £117 to £1,641. That equates to roughly £10 per month for average users. Without government intervention, the cap would have risen this spring.
The new cap is based on a typical household consuming 11,500 kWh of gas and 2,700 kWh of electricity annually, paying by direct debit. Despite the reduction, bills remain about one-third higher than before Russia’s invasion of Ukraine, and collective household energy debt has climbed to more than £4 billion.
Why the Saving Is Smaller Than Promised
In the Autumn Budget, Chancellor Rachel Reeves pledged that changes to policy costs would reduce typical bills by £150 per year. The government scrapped the Energy Company Obligation scheme and shifted certain charges to general taxation.
However, rising network costs have diluted the saving. The expense of maintaining and upgrading energy infrastructure, including cables and gas pipes, is increasing by about £6 per month for a typical household. As a result, the overall annual saving is £117 rather than £150.
Reeves said the government is “beginning to turn a corner,” arguing the measures put more money in people’s pockets. Critics counter that shifting costs to taxation does not eliminate them but redistributes the burden.
How Individual Bills Will Be Affected
The exact impact varies depending on energy use and tariff type. The discount will largely come through a lower electricity unit rate, meaning households with higher electricity consumption may benefit more than those who rely heavily on gas.
From April, gas prices will be capped at 5.74p per kWh and electricity at 24.67p per kWh. Electricity unit rates are down nearly 11%, while gas unit rates fall by about 3%.
Standing charges will shift as well. The daily electricity standing charge will rise to 57.21p, while the gas standing charge will fall to 29.09p. Prepayment meter customers will face a typical annual bill of £1,597, slightly below those paying by direct debit. Customers paying quarterly by cash or cheque will pay more, at around £1,772 annually.
Approximately 40% of households are on fixed deals. Suppliers are expected to pass on savings, and Ofgem has enforcement powers if they fail to do so.
Uncertain Outlook Ahead
Wholesale gas prices remain volatile, making future bill movements difficult to predict. Energy consultancy Cornwall Insight expects limited further changes later in the year, suggesting April’s cut may represent the largest drop for now.
Meanwhile, households continue to face broader cost pressures. Water bills, council tax and other household expenses are rising, offsetting some of the relief from lower energy costs.
Experts advise consumers to monitor usage and review tariffs to secure additional savings where possible, as competition in the retail energy market has shown signs of improvement with switching activity rising year on year.
