Household energy bills are set to drop in April after energy regulator Ofgem lowered the energy price cap by seven per cent.
The reduction aligns with Chancellor Rachel Reeves’ promise that £150 would be cut from the average household bill.
Ofgem announced on Wednesday morning that it had reduced the energy price cap by £117 to £1,641 a year for a typical dual fuel household.
Sir Keir Starmer said: “Energy bills are at the front of everybody's mind, and I know they've been too high for too long.”
The prime minister said the price cap drop will mean lower energy bills for millions across the UK, but added that “there is more to do and my government is pulling every lever to bear down on the cost of living and protect the pound in the pockets of working people.”
The energy regulator estimated the change to the energy price cap amounted to a reduction of around £10 a month for the average household using both electricity and gas.
In November, Ms Reeves promised to cut £150 from the average household bill from April. On Wednesday, she said: “Cutting the cost of living is this government's number one priority and I know energy bills are one of the biggest concerns, that's why at the budget I said we would bear down on energy bills.”
The price cap, which was first introduced by the regulator in 2019, limits the maximum amount energy suppliers can charge for each unit of gas or electricity used.
It also sets a maximum daily standing charge – the cost of having your home connected to the grid.
The headline price cap figure of £1,641 provided by Ofgem indicates what a household using gas and electricity, and paying by direct debit, can expect to pay if their energy consumption is typical.
Energy secretary Ed Miliband said the energy price cap drop was “happening because of the actions we took in the budget”, but added to Sky News, that the government knows it has “got further to go”.
He said: “The price cap in 2025 across the year was lower in real terms than 2024. We want to drive it down even lower, so it's up to £300 lower.”
Tim Jarvis, director general of markets at Ofgem, said: “The main driver of today's 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.”
It is important to note that it does not limit a home’s total bills because people still pay for the amount of energy they use – so if it is above the average they will pay more, and if it is below they will pay less.
Speaking before the energy price cap announcement, Which? energy editor Emily Seymour said: “Households can expect a significant cut to their energy bills in April, which will come as a relief to millions of people struggling with cost-of-living pressures.
“The bulk of this change is expected to be applied to your electricity price per unit, so your exact savings will depend on your usage; look out for communications from your energy provider in the coming weeks to see how it will affect your bills.”
Household energy prices to fall by 7% from April 1
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