Octopus Energy and British Gas have confirmed they will pass on government savings to customers from April 2026, with the typical household saving up to £134 on energy bills through new policies removing legacy costs and green levies.
Several energy companies have outlined their intentions to deliver substantial savings to customers next year, with one provider suggesting reductions of up to £134 per household. This development follows Chancellor Rachel Reeves‘ pledge during her Autumn Budget to tackle soaring energy costs ‘at the source’.
These initiatives involve scrapping ‘legacy costs’ and environmental levies that have previously contributed to eye-watering electricity prices. Industry experts estimate that households could pocket an average of £134 through these policy changes alone – a move being championed by some of Britain’s biggest energy providers.
Octopus Energy has pledged to transfer Autumn Budget benefits directly to its clientele, with bill reductions from April 1, 2026. The company described this step as integral to its mission of creating a fairer and more accessible energy market, whilst encouraging rival firms to follow suit.
Greg Jackson, CEO and Founder of Octopus Energy, commented: “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.
“Octopus customers can rest easy – we’ll do it all automatically. We hope other suppliers will follow our lead so everyone can benefit.”
Likewise, British Gas has confirmed it will pass on the energy cost reductions to all customers on fixed tariffs when the policy takes effect on April 1. A British Gas spokesperson said: “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 has also previously announced that the Energy Company Obligation Scheme will conclude in March 2026, whilst simultaneously cutting what households contribute towards the Renewables Obligation (RO) scheme through their energy bills.
Although the Government has pledged substantial savings through these modifications, next year’s bills will still be heavily dependent on wholesale energy rates, which fluctuate continuously.
Ministers have estimated their policies will deliver savings of £150 for the typical household, breaking down as £88 from the RO policy changes, £59 from the ECO policy adjustments, plus £7 in combined VAT.
Nevertheless, Ofgem has indicated this will translate to £134 off the price cap, calculated on policy costs within the current price cap, for the standard dual-fuel household, which typically consumes less electricity than average compared to other household types.