Big fall in household energy bills predicted from April

Annual energy bills will fall by £117 from April due to government changes, forecasters have predicted.

Measures announced in the budget will mean a drop to £1,641 a year for a typical dual‑fuel household, according to research firm Cornwall Insight. That would represent a 7% fall from the £1,758 being paid until the end of the financial year in March, under the energy price cap.

If the forecast proves correct, annual bills will be at their lowest since July 2024. The expected fall is down to government interventions, which are doing "most of the heavy lifting" to reduce costs, Cornwall Insight's principal consultant Dr Craig Lowrey said.

Why? As announced in the budget, some charges that had been part of bills are being removed and instead funded through general taxation. Chancellor Rachel Reeves had said the government would reduce bills by £150 by cutting levies.

Money blog: Big drop in inflation announced - follow live The Energy Company Obligation (ECO) scheme, designed to tackle fuel poverty and help reduce carbon emissions, has been scrapped, while the vast majority (75%) of renewables obligation costs are being removed from consumer energy bills, the research firm said. But bills will not fall by the full amount that making those changes saves, as other charges associated with operating and maintaining energy networks have risen.

Not as steep a drop as first thought The fall is also less steep than was first expected in December. Households were then forecast to experience the biggest price fall in two years, a £138 drop.

Volatility in wholesale gas markets amid geopolitical tension has changed this. What is the energy price cap? The energy price cap is a limit on the amount energy providers can charge per unit of power.

It's set by the regulator Ofgem every three months and is based on wholesale energy prices and policy measures. The official energy price cap announcement for April will be made next Wednesday.

Lower bills are anticipated to stay as the energy price cap is forecast to "remain relatively steady" for 2026, Cornwall Insights said. Only a small rise in July is foreseen, though fossil fuel market moves and policy announcements could change this..