British household energy costs to fall £117 from April as Ofgem reduces price cap

Energy bills for millions of households in Great Britain will fall by £117 from April after the regulator Ofgem confirmed a 7% reduction in its quarterly price cap.

The new cap will set the average annual gas and electricity bill at £1,641 for the three months from April, down from £1,758 under the January-to-March limit. The change applies to around 29 million households and reflects a combination of falling wholesale prices and adjustments announced in the government’s autumn budget.

The reduction follows the chancellor’s decision to shift certain green levies from household bills into general taxation and to end a bill payer-funded energy efficiency scheme. However, the savings fall short of the £150 annual reduction previously promised.

“I can tell you today that for every family we are keeping our promise to get energy bills down and cut the cost of living with £150 cut from the average household bill from April next year,” Rachel Reeves said at the time of the budget.

Ofgem said the primary factor behind the latest drop was lower wholesale costs, which declined by 6% in recent months. Network charges, however, increased by £66 due to investment in maintaining and upgrading Britain’s energy infrastructure. Overall domestic energy bills remain roughly one-third higher than before Russia’s invasion of Ukraine triggered a continent-wide energy crisis.

Tim Jarvis, the director general of markets at Ofgem, said: “Today’s announcement will be welcome news for many households.

“Wholesale energy prices have fallen in recent months, and we’re investing in our network to safeguard the future energy system. The main driver of today’s reduction is the change to policy costs announced by the chancellor in the budget.”

Prime minister Keir Starmer acknowledged the ongoing strain on households, saying: “I know there is more to do and my government is pulling every lever to bear down on the cost of living and protect the pound in the pockets of working people.”

Despite the reduction, campaigners warned that energy remains unaffordable for many. Peter Smith, a director at National Energy Action, said: “Any fall in sky-high energy bills is welcome. But the new level is still far from affordable. Those on the lowest incomes in the leakiest homes will face deep debt and will still struggle to stay warm and well at home.”

Clare Moriarty, the chief executive of Citizens Advice, added: “A fall in energy prices is welcome but for many people bills remain stubbornly high. For millions of households this has stopped being a temporary hardship and become an ongoing threat to their financial stability.

“The government has taken steps in the right direction to bring down bills. However, planned changes to how warm home discount costs are recovered mean those who need it most – households on low incomes with the highest energy needs – could keep as little as half the support in practice.”

The debate over Britain’s energy transition has intensified as electricity prices remain among the highest in the developed world. Craig Lowrey, principal consultant at Cornwall Energy, said the financial realities of reaching net zero must be addressed candidly. “There needed to be ‘an open conversation about the fact that such a transition will not be cost-free’,” he said.

“Bills aren’t going to drop by two or three hundred pounds overnight, but long-term progress is possible if we stick with the transition. Ultimately, a move to homegrown energy gives us a stronger chance of eventually achieving price stability while providing greater energy security in the process.”

Adjusted for inflation, Ofgem noted the new cap is 12.3%, or £231, lower than during the same period in 2025, offering some relief even as broader affordability concerns remain.

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