Energy companies will pass on savings of up to £134 per household following government policy changes
A number of energy firms have announced plans to deliver significant savings to households next year, with one supplier indicating cuts of up to £134 per home. The news comes after Chancellor Rachel Reeves vowed in her Autumn Budget to address spiralling energy bills “at the source”.
The measures involve removing “legacy costs” and environmental levies that have previously pushed electricity prices sky-high. Industry analysts predict that families could save an average of £134 through these policy adjustments alone, a proposal backed by some of the nation’s largest energy suppliers. The changes form part of wider reforms outlined in the Government’s Autumn Budget.
Octopus Energy has committed to passing on Autumn Budget savings straight to its customers, with bill cuts taking effect from April 1, 2026. The firm described the initiative as central to its goal of building a fairer and more affordable energy marketplace, whilst urging competitors to do likewise, reports the Mirror.
Greg Jackson, CEO and Founder of Octopus Energy, said: “Octopus has long called for cuts in policy costs to help bring bills down, so we are delighted to see the government taking action. These changes will bring a welcome relief to customers, and we’ll pass them through on all of our tariffs as soon as they kick in, so no one misses out.”
He added: “Octopus customers can rest easy – we’ll do it all automatically. We hope other suppliers will follow our lead so everyone can benefit.” Similarly, British Gas has confirmed it will pass on the reductions in energy costs to all customers on fixed tariffs from April 1 when the policy comes into effect.
A spokesperson for British Gas stated: “We welcome the Government’s steps to ease energy costs as we’ve called for these levies to be moved into general taxation for some time. We’ll of course ensure all our customers benefit, including those on fixed-term tariffs.”
The Government also previously declared that the Energy Company Obligation Scheme will end in March 2026.
At the same time, it will reduce what households contribute towards the Renewables Obligation scheme through their energy bills.
Despite the Government promising significant savings through these changes, next year’s bills will still largely depend on the ever-changing wholesale energy rates.
Ministers have estimated their policies will result in savings of £150 for the average household.
The savings are broken down as £88 from the Renewables Obligation policy changes, £59 from the Energy Company Obligation adjustments, and a combined VAT saving of £7.
However, Ofgem has suggested this will equate to a £134 reduction off the price cap.
This calculation is based on policy costs within the current price cap.
It applies to the standard dual-fuel household, which typically uses less electricity than average compared to other types of households.