Annual energy bills are set to decrease by £138 in April as a result of government changes, according to trusted forecasters.
Initially, costs were anticipated to rise with the announcement of the next energy price cap for the three-month period starting in April.
However, due to measures outlined in the budget, research firm Cornwall Insight predicts that the annual bill for a typical dual-fuel household will drop by 8% to £1,620.
If this forecast holds true, annual bills will reach their lowest point since July 2024, and households will witness the largest price drop in two years.
Policy costs are identified as the primary reason for the increase in bills from January 1st to March 31st, 2026.
Despite a decline in wholesale oil and gas costs, energy prices for bill payers are expected to be slightly higher starting from New Year’s Day. In the present day, policy measures play a crucial role in determining fluctuations in energy bills.
Between January and March, the typical annual dual-fuel bill is projected to be £1,758 – an increase from the current £1,755 cap.
The major components contributing to bills are energy costs, followed by infrastructure charges.
What’s changing?
Following the budget announcement, certain charges that were previously included in bills are being eliminated and funded through general taxation.
Chancellor Rachel Reeves announced that the government aims to reduce bills by £150 by cutting levies.
The Energy Company Obligation (ECO) scheme, aimed at addressing fuel poverty and reducing carbon emissions, has been eliminated.
The majority (75%) of renewables obligation costs will no longer be charged to consumer energy bills but will be covered by general taxation.
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The anticipated increase in national grid costs is slightly lower than initially anticipated.
Cornwall Insights suggests that a further decrease in bill prices is probable in July.
How does the price cap function?
The energy price cap serves as a restriction on the amount energy providers can invoice per unit of power. It is determined by the regulatory body Ofgem every quarter and is influenced by wholesale energy prices and policy measures.
The official announcement of the energy price cap for April is scheduled for February 25th.