Ofgem cuts energy price cap by 7% for April to June quarter
Energy bills are falling from 1 April after Ofgem confirmed a 7% cut to the energy price cap today.
The reduction brings the average annual bill for a household paying by Direct Debit for both gas and electricity to £1,641 — down £117 on the current level, or around £10 a month.
The main cause is a government budget decision to remove £150 in policy costs from bills — specifically ending the Energy Company Obligation scheme and moving the cost of the Renewables Obligation onto general taxation.
Ofgem Director General for Markets Tim Jarvis said the announcement would 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,” he said.
“The main driver of today’s reduction is the change to policy costs announced by the Chancellor in the budget.”
The price cap sets the maximum rate per unit and standing charge that can be billed to customers not on a fixed-rate tariff.
It covers the period from 1 April to 30 June 2026.
Ofgem says customers on fixed deals paid around £115 less than the cap on average last year, and is encouraging households to speak to their supplier about whether switching tariff or payment method could cut their bills further.
Eight million customer accounts currently pay by standard credit rather than Direct Debit — a switch Ofgem says could save around £131.
Jarvis added: “The price cap protects households from overpaying for energy, but it’s a safety net.”
“We’d encourage people to speak to their supplier about the options available and consider whether a different tariff or payment method could help bring their bills down further.”
Ofgem has also confirmed a pilot for lower standing charge tariffs will start this spring, targeting customers with low energy usage.
It will initially be available to eligible customers of EDF, E.ON, Octopus and British Gas.
Fuel poverty charity National Energy Action has welcomed the reduction but says the new level is still unaffordable for the lowest-income households.
Director of Policy Peter Smith said: “Any fall in sky-high energy bills is welcome.
“Hopefully, it can take a little pressure off households who have been struggling in cold, unhealthy homes this winter.
“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.”
Smith added that ending the Energy Company Obligation had cut funding for fuel poverty schemes by more than £1.5 billion a year, and called on the government’s Warm Homes Plan to deliver transformational change for the most vulnerable households.
Ofgem is urging anyone struggling with bills to contact their supplier about tailored repayment plans, financial assistance or debt advice.
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