Household energy bills are set to fall by 7% from April, after regulator Ofgem confirmed a reduction to the energy price cap.
For households on standard variable tariffs covered by the cap, this equates to a saving of around £10 a month for those using a typical amount of gas and electricity. The average annual bill will drop by £117, from £1,758 to £1,641.
The Government had previously pledged a £150 annual saving. However, rising network costs have reduced the overall benefit. While policy costs have been cut – including scrapping the Energy Company Obligation scheme and shifting some charges into general taxation – the cost of maintaining and upgrading energy infrastructure has increased by roughly £6 a month for a typical household.
Energy bills are made up of several components: wholesale gas and electricity prices, network costs, and policy charges. Although wholesale prices have eased since the sharp increases following Russia’s invasion of Ukraine, they remain volatile, and bills are still around a third higher than pre-war levels.
The reduction will largely come through a lower unit price for electricity. As a result, households that use more electricity – including some vulnerable customers who rely on medical equipment – may see greater savings. Those who use less electricity but more gas are likely to benefit less.
Customers on fixed tariffs will also see reductions, with suppliers expected to confirm revised charges shortly.
Despite the April drop, households are being encouraged to review their tariffs and shop around for further savings.
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