The energy regulator, Ofgem, is expected to announce a £117 drop in the price cap on standard tariffs next week, reducing the typical annual household bill to £1,641, according to energy consultancy Cornwall Insight. This represents a 7% decrease compared to current rates, slightly lower than earlier forecasts of 8% (£138) due to rising wholesale energy costs since December.
The cuts follow measures outlined in November’s budget, including scrapping the Energy Company Obligation, a home insulation scheme, and shifting much of the cost of subsidising older renewable energy projects to general taxation. Once VAT and pricing allowances are applied, Cornwall Insight estimates the savings would reduce bills by around £145 annually. However, higher levies for maintaining Britain’s gas and electricity networks have partially offset these reductions.
While the price cap primarily governs standard variable and prepayment meter tariffs, the government has instructed energy suppliers to pass on the savings to all households, including those on fixed-price deals.
Craig Lowrey, principal consultant at Cornwall Insight, welcomed the news but cautioned: “Any reduction in bills is positive, easing pressure at a time when affordability really matters. The real test will be keeping those savings going. Investment is needed if we want an energy system that is more secure and resilient, but it will not be cost-free.”
Emily Seymour, energy editor at consumer group Which?, noted that the cuts will primarily affect electricity prices per unit, meaning individual savings will vary depending on household usage. She advised consumers to review communications from their energy providers and consider switching tariffs where competitive deals exist.
The Department for Energy Security and Net Zero reaffirmed that the government is delivering on its promise to remove an average of £150 from household bills starting 1 April 2026. Meanwhile, Simon Francis, coordinator of the End Fuel Poverty Coalition, urged households to focus on changes in unit costs and standing charges rather than headline figures.
The announcement comes as a relief to families grappling with cost-of-living pressures, providing a much-needed break as winter energy costs continue to challenge budgets.
