Millions of households across Great Britain are set to see a significant reduction in their energy costs this spring, with a forecasted annual drop of more than £100. Trusted energy analysts have confirmed that changes announced in the government's budget will lead to lower bills from April.
Forecast details and budget impact
Leading research firm Cornwall Insight has projected that the typical annual dual-fuel energy bill will fall by 8% to £1,620 starting in April. This represents a substantial decrease of £138 compared to previous expectations. The firm had initially anticipated a rise when the next price cap is set, but measures outlined by Chancellor Rachel Reeves have reversed that trend.
The key driver behind this upcoming decrease is a major shift in how certain policy costs are funded. Following the budget, the government is removing specific levies from consumer energy bills and instead covering them through general taxation. Chancellor Reeves had pledged to reduce bills by £150 by cutting these levies.
What is changing for bill payers?
The reduction comes despite a recent short-term increase. From 1 January to 31 March 2026, the typical annual bill will actually rise slightly to £1,758, up from the current £1,755 cap. This January increase is itself primarily due to policy costs, even as wholesale oil and gas prices have fallen.
Several specific charges are being removed from bills. The Energy Company Obligation (ECO) scheme, which aimed to combat fuel poverty and lower carbon emissions, has been scrapped. Furthermore, 75% of renewables obligation costs are being transferred from energy bills to the general tax fund. An anticipated rise in national grid costs is also now expected to be slightly lower than first predicted.
If Cornwall Insight's forecast is accurate, April's prices will be the lowest since July 2024 and will mark the most substantial price fall in two years. The analysts also consider a further decline in bill prices in July to be likely.
How the energy price cap works
The energy price cap is set by the regulator Ofgem every three months. It limits the amount suppliers can charge per unit of gas and electricity. The cap is calculated based on several factors, primarily wholesale energy prices and government policy measures, which have become the main determinants of recent bill fluctuations. The official announcement for the April price cap will be made by Ofgem on 25 February.
This structural change highlights a significant shift in energy policy, moving the financial burden of certain green and social schemes away from direct consumer charges and onto the broader tax base.
