Energy bills will fall by £117 for millions of households in Britain from April
Millions of households in Britain will see their energy bills fall by £117 a year from April. This comes after the energy regulator, Ofgem, announced that its price cap will drop by 7%.
From April, the average yearly gas and electricity bill for households paying by direct debit will be £1,641. This is down from £1,758 under the current cap, which covers January to March. The new cap will last for three months.
The price cap sets the maximum amount that energy companies can charge customers for each unit of gas and electricity. It affects about 29 million households across Great Britain.
The fall in bills follows changes announced by the Chancellor, Rachel Reeves, in the November budget. She had promised to cut energy bills by £150 a year. However, rising costs linked to the UK’s energy networks reduced the final savings, so bills will fall by £117 instead of the full £150.
In the budget, the government decided to move some green energy costs away from household bills and into general taxation. It also ended an energy efficiency scheme that had been funded by billpayers. These steps helped lower the price cap.
However, the cost of maintaining and upgrading the UK’s energy grid has increased. These higher network costs reduced part of the savings promised by the government. Ofgem said network charges have gone up by £66 compared with the previous cap period.
The savings will apply to all households, but the exact amount each family saves will depend on how much energy they use and the type of tariff they have.
Around 40% of households are on fixed-rate deals. These customers will benefit fully from the government’s policy changes without being affected by the rise in network costs in the same way. This means they are likely to see bigger savings compared to people on variable tariffs.
For households on variable tariffs, the savings will be smaller than the £150 originally promised. Even so, the reduction will still provide some relief at a time when many families are struggling with the cost of living.
Without the government’s action, energy bills would have increased for a fourth straight quarter. This would have happened even though wholesale energy prices have fallen in recent months. The reason is that the cost of upgrading Britain’s electricity and gas networks has gone up.
Although the new price cap is lower, energy bills are still much higher than they were before the war in Ukraine. Russia’s full invasion of Ukraine caused a major energy crisis in Europe. As a result, gas prices rose sharply, pushing up household bills across the UK.
Even now, domestic energy costs remain about one-third higher than before the crisis. Gas prices are still affected by the cost of importing liquefied natural gas from countries like the United States and those in the Middle East. At the same time, the UK’s move toward cleaner energy sources has added extra costs to the system.
Keir Starmer said the government knows more needs to be done. He said his team is working hard to lower the cost of living and protect working people’s incomes.
Tim Jarvis, director general of markets at Ofgem, said the latest announcement would be positive news for many households. He explained that wholesale energy prices have fallen in recent months. He also said that policy changes announced in the budget were the main reason for the reduction in the cap.
Charities that work with low-income households welcomed the reduction but warned that bills are still too high for many people. Peter Smith from National Energy Action said any drop in “sky-high” energy bills is good news. However, he stressed that many low-income families living in poorly insulated homes will continue to face serious financial problems. Some may still struggle to heat their homes properly.
Clare Moriarty, chief executive of Citizens Advice, also said that while lower prices are welcome, bills remain high for millions of people. For many households, high energy costs are no longer a short-term problem but an ongoing threat to their financial stability.
The cost of electricity in the UK is among the highest in the developed world. This has become an important political issue. Opposition parties, including Reform UK and the Conservatives, have promised to lower costs for households and businesses. They say they would scrap key parts of the government’s net zero plans in order to boost the economy.
Craig Lowrey from Cornwall Energy said the country needs an open discussion about the costs of the energy transition. He said moving to cleaner energy will not be free. Bills are unlikely to fall by hundreds of pounds quickly, but he believes long-term progress is possible if the UK continues with its plans.
Under the new cap, the price of electricity will fall by 10.9% to 24.67p per kilowatt hour. This change reflects cuts to government levies that fund renewable energy subsidies and the warm home discount scheme. The cap on gas prices will fall by 3.2% to 5.74p per kilowatt hour, mainly because wholesale gas prices have dropped.
When adjusted for inflation, the new cap is 12.3%, or £231, lower than the same period last year. Wholesale prices, which make up the largest share of energy bills, have fallen by 6% over the past three months.
In summary, the April price cap reduction will bring some welcome relief for millions of households. However, energy costs remain high compared with levels before the energy crisis, and many families may continue to struggle despite the latest cuts.
Published: 26th February 2026
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