Energy bills will fall by £117 for millions of households in Great Britain from April | Energy bills
Millions of households will see their annual energy bills drop by £117 from April, after Rachel Reeves’ plan to cut £150 a year from bills was partially blocked by rising costs.
Energy regulator Ofgem’s three-month cap will fall by 7% a year for three months from April, falling from £1,758 to £1,641 below the current January-March cap for the average gas and electricity bill in Great Britain.
The cut, which will provide some relief to strained household finances, follows the chancellor’s November budget in which he shifted some of the cost of green energy from household bills to general taxation.
But the reduction is smaller than the £150 cut Reeves promised in April; The outages were partly offset by increased costs of maintaining and upgrading the UK’s energy networks.
Despite the drop in the price cap, which sets the maximum price suppliers can charge customers in 29 million households for each unit of gas and electricity, domestic energy costs are about a third higher than before Russia’s full-scale invasion of Ukraine triggered Europe’s energy crisis.
Since then, bills have remained high and Britain’s energy debts have soared to record levels; This is partly because gas market prices remain inflated due to the cost of importing more gas by tanker from the US and the Middle East, but also because of the high costs of the UK’s energy transition. Ofgem said network charges had increased by £66.
Commenting on the budget, Reeves said: “Today I can tell you that we are delivering on our promise to reduce energy bills for every family and cut the cost of living by cutting £150 from the average household bill from April next year.”
The Chancellor shifted taxes used to support renewable energy projects to general taxation and scrapped the ratepayer-funded energy efficiency scheme.
The savings will apply to all households regardless of what tariff they have, but will vary depending on how much energy they use.
Prime Minister Keir Starmer said on Wednesday: “I know there is more to be done and my government is using every tool to reduce the cost of living and keep the pound in the pockets of working people.”
Tim Jarvis, 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 are investing in our network to protect the energy system of the future. The main reason for today’s reduction is the change in policy costs announced by the chancellor in the budget.”
Peter Smith, director of National Energy Action, which helps fuel poverty, said: “Any reduction in 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 debts and still struggle to stay warm and healthy in their homes.”
Clare Moriarty, chief executive of Citizens Advice, said: “A drop in energy prices is welcome but for many people bills remain stubbornly high. “For millions of households this has moved from a temporary inconvenience to a permanent threat to their financial stability.
“The government has taken steps in the right direction to reduce bills. But planned changes to how warm home rebate costs are recovered mean those who need it most – low-income households with the highest energy needs – could in practice receive as little as half the support.”
The cost of electricity in the UK, which is among the highest in the developed world, has emerged as a key political dividing line after opposition parties Reform UK and the Conservatives vowed to cut costs for households and businesses by scrapping key elements of the government’s plan to reach net zero to stimulate the economy.
Craig Lowrey, chief consultant at leading consultancy Cornwall Energy, said there needed to be “an open conversation that such a transition will not be cost-free”.
He said: “Bills won’t drop by two or three hundred pounds overnight, but long-term progress is possible if we stick with the transition. Ultimately, the transition to domestic energy gives us a stronger chance of achieving price stability, while also providing greater energy security in the process.”
When adjusted for inflation, the new cap is 12.3%, or £231, lower than the same period in 2025, Ofgem said. Wholesale prices, which make up the largest part of the bill, have fallen by 6 percent in the last three months.
