Cheaper energy bills are finally on the way, with Ofgem confirming a 7% cut to the energy price cap from April, easing pressure on households after years of volatility.
The regulator has set the default tariff cap at £1,641 a year for a typical dual-fuel household paying by Direct Debit, down £117 on the previous quarter. That works out at roughly £10 a month back in people’s pockets from 1 April to 30 June 2026.
The price cap applies to customers not on a fixed deal and limits the maximum unit rates and standing charges suppliers can levy. While still high by historic standards, the new level is more than £200 lower than a year ago and marks a clear shift after successive quarterly rises.
Ofgem says the main driver is government intervention rather than a dramatic change in wholesale markets.
The fall is still below the level promised by Rachel Reeves in the budget, who had said removing green levies from bills onto taxation, would save consumers £150.
Rising network costs and stubbornly volatile gas prices have offset some of those gains say Labour.
Tim Jarvis, Director General for markets at Ofgem, said: “The main driver of (the) reduction is the change to policy costs announced by the Chancellor in the budget.
“Our focus at Ofgem remains on bearing down on the costs within our control, and unlocking the investment needed to support the transition to a more stable energy system over the longer term.”
He stressed the cap remains a safety net rather than the cheapest option. Last year, customers on fixed tariffs paid around £115 less on average than those on the cap, with switching activity up almost 20% year on year.
Suppliers are also rolling out more time-of-use deals offering cheaper off-peak rates, evenings or weekends.
Ofgem is urging households to shop around and speak to their supplier about alternatives. Eight million customers still pay by standard credit and could save around £131 a year by switching to Direct Debit or smart prepayment.
The regulator has also confirmed a pilot of lower standing charge tariffs will launch this spring with EDF, E.ON, Octopus and British Gas, aimed at giving low-use households more choice.
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