Household energy bills are set to drop by an average £117 from April, regulator Ofgem has confirmed, announcing a 7 per cent drop to the quarterly price cap.
This figure has lowered to £1,641 a year for a typical dual fuel household. The substantial drop is driven by the government’s move to cut energy bills by scrapping an energy efficiency programme.
But this massive fall could be short-lived, experts have warned, as the government is urged to ensure that changes will last.
A new report from the Resolution Foundation has credited the change, saying it will “deliver a clear boost to living standards”, and should “help to keep bills below current levels until at least 2029”.
The influential think tank also praised the progressive effect of the measure, finding the policy will benefit lower-income households the most. Due to this, around a quarter of households (24 per cent) will save more than £200 this year.
The changes will also make the typical energy bill £200 lower than in 2024 in real terms, researchers found, which is a welcome drop after the pressures of the Covid pandemic and cost of living crisis.
However, they added that this could be eroded in just three years. Researchers estimated policy costs and investment in network infrastructure mean bills will be just £60 lower on average than today in March 2029, and the end of the government’s discount scheme a month later will add another £55.
This means a “cliff edge” looms, the Resolution Foundation said, as the government will need to decide whether to allow bills to rise or find funding to extend the support. It added ministers should not “wait until the eleventh hour to decide” and should instead set out a durable framework before 2029.
Jonathan Marshall, principal economist at the Resolution Foundation, said: “Next week’s energy price cap announcement will show a significant drop in household bills, largely because of the government’s £6.9bn energy bill discount.
“The policy is well designed. By reducing electricity unit rates, it supports the shift towards electrification at the same time as delivering savings worth twice as much to the poorest families as to the richest, as a share of spending.
“However, this support is due to end in April 2029. The government should set out a clear and durable framework for deciding which energy policy costs are funded by bills and which through taxation soon, to avoid scrambling for a solution in an election year.”
Responding to Resolution’s research, a Department of Energy Security and Net Zero spokesperson said: “This government is delivering on our promise to take an average of £150 of costs off bills from 1 April. Ofgem will set out the final price cap figure in the usual way next week.
“Tackling the energy affordability crisis is our number one priority – and this is just the start.
“We are getting off the rollercoaster of volatile fossil fuels and onto clean homegrown power, which we control, to bring down bills for good.”
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Households energy bills to drop from April after Ofgem energy price cap is lowered
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