Significant Reduction in Household Energy Costs Forecast from April
Households across the United Kingdom are poised to experience a welcome financial relief as energy bills are projected to decrease substantially starting in April. According to the latest analysis from research firm Cornwall Insight, annual energy expenses for a typical dual-fuel household will drop by £117, bringing the total to £1,641 per year.
This anticipated reduction represents a notable 7% fall from the current energy price cap of £1,758, which remains in effect until the end of March. If these forecasts hold true, energy bills will reach their lowest point since July 2024, offering much-needed respite to consumers grappling with ongoing cost-of-living pressures.
Government Interventions Drive the Decline
The primary catalyst behind this expected price drop is a series of government policy changes announced in the recent budget. Chancellor Rachel Reeves confirmed that the administration would cut bills by £150 through the elimination of specific green levies previously embedded in energy charges.
Dr. Craig Lowrey, principal consultant at Cornwall Insight, emphasized that government measures are performing "most of the heavy lifting" in reducing costs. Key initiatives include the scrapping of the Energy Company Obligation (ECO) scheme, which was designed to combat fuel poverty and lower carbon emissions, along with the removal of 75% of renewables obligation costs from consumer bills.
These charges will now be funded through general taxation rather than directly through household energy payments, shifting the financial burden away from individual consumers.
Factors Moderating the Price Drop
While the elimination of green levies generates significant savings, the overall reduction in bills will not be as steep as initially projected. Cornwall Insight notes that increased charges associated with operating and maintaining energy networks have partially offset the benefits of the policy changes.
Additionally, geopolitical tensions and volatility in wholesale gas markets have altered earlier forecasts. In December, households were anticipated to see a £138 decrease, but current predictions now estimate a slightly smaller drop of £117.
Stability Expected Throughout 2026
Looking ahead, the energy price cap is forecast to remain relatively steady for the remainder of 2026. Cornwall Insight anticipates only a minor increase in July, though this outlook could be influenced by future movements in fossil fuel markets and additional policy announcements.
The official energy price cap announcement for April will be made next Wednesday by Ofgem, the industry regulator. The cap, which limits the amount energy providers can charge per unit of power, is adjusted quarterly based on wholesale energy prices and governmental policy measures.
This period of lower energy costs is expected to provide sustained financial relief to households, contributing to broader economic stability and easing the burden on family budgets across the nation.
