Households across Great Britain are set for a welcome reduction in their energy bills this spring, with a leading forecaster predicting a significant fall in the official price cap. The change is expected to save the typical home hundreds of pounds over the course of a year.
Budget Measures Drive Predicted Price Drop
Consultancy Cornwall Insight has forecast that the energy price cap will fall by 8% in April. This would bring the upper limit that suppliers can charge per unit of energy to its lowest level since September 2024. The predicted cut is equivalent to a saving of £138 on a typical annual dual-fuel bill.
This follows the energy regulator Ofgem's announcement in January of a marginal 0.2% increase, taking the cap to £1,758. The April forecast would see the annual cost for an average household's gas and electricity use drop to approximately £1,620.
The primary driver behind this anticipated decrease is the government's autumn budget. Chancellor Rachel Reeves outlined two key changes designed to lower bills. Firstly, the government is ending the Energy Company Obligation (ECO) scheme, which required suppliers to fund household energy-saving measures. Secondly, it is implementing a substantial 75% reduction in the amount households pay towards the Renewables Obligation scheme, which subsidises clean power generation.
The Long-Term Strategy and Shifting Costs
Reducing domestic energy costs is a central aim of the Labour government, which has a target to cut £300 off average bills by 2030. Ministers plan to achieve this through a major expansion of clean power generation and by moving certain policy costs from bills into general taxation, a move intended to incentivise a switch from gas to electricity.
However, experts caution that the financial burden does not disappear. Craig Lowrey, Principal Consultant at Cornwall Insight, stated: "We need to be clear – costs aren't vanishing, they're shifting. Moving the renewables obligation from bills to taxation may feel like a win, but ultimately, it's still going to be paid by the public."
He emphasised the long-term necessity of the transition, adding: "The transition to net zero isn't cheap, but it's the only route to genuinely lower bills in the long term... Staying the course on clean energy is the sustainable choice."
Global Markets and Future Pressures
The quarterly price cap is also influenced by volatile global wholesale gas prices. Cornwall Insight noted that recent increases in supplies from US producers and milder-than-expected winter weather in Europe have contributed to slightly lower prices. Optimism around potential peace talks regarding the war in Ukraine may also be helping to temper markets.
While the April prediction offers relief, households face future increases for infrastructure upgrades. Bills are expected to rise by an estimated £108 a year by 2031 to help fund a £28bn programme of upgrades to the UK's gas and electricity grids.
The price cap, which remains well above pre-2022 levels, applies to Great Britain but does not cover Northern Ireland, which has its own separate market arrangements.
