Millions of households are set to receive updates on their forthcoming energy bill reductions for April. Ofgem, the regulatory body, regularly revises the price cap every three months, impacting the bills of the majority on standard variable tariffs.
This time, the adjustment includes the £150 relief announced by Chancellor Rachel Reeves in the Budget to alleviate the cost of living pressure. Projections from industry experts indicate a potential decrease of £117, bringing the annual cost for a typical dual fuel household to £1,641. It’s important to note that the cap sets the maximum amount suppliers can charge per unit of energy and standing charges, with actual bills varying based on usage.
The anticipated savings are not the widely publicized £150 yearly reduction. The actual estimated saving for a typical household is around £134, but additional costs like increased electricity standing charges will offset some of these savings. Nonetheless, 98% of households are expected to experience bill reductions, contingent on their energy consumption patterns.
The Resolution Foundation predicts that approximately 7.5 million households will save less than £100, while 6.8 million could save over £200, and 1.8 million may save more than £300. The benefit is likely to favor households with higher energy consumption, such as those with electric heating or larger families.
While the reduction in the unit rate will benefit high-energy users, those with lower energy consumption might be disappointed as the standing charge remains unchanged. About 34 million customer accounts are on standard variable tariffs, with an additional six million using prepayment meters. However, fixed tariff customers, numbering around 21 million, will not be affected by Ofgem’s price cap.
Confusion initially arose regarding the implementation of the Budget’s announced savings, but the government clarified that fixed tariff customers could expect these savings from April 2026. The most substantial savings will be observed in the first year, continuing to a lesser extent for three years, although ongoing costs may moderate these benefits in the long term.
Despite potential fluctuations due to policy changes and additional costs, the Resolution Foundation anticipates that annual bills will remain approximately £60 below current levels until 2029.