Ofgem energy price cap set to fall sharply – everything you need to know

The vast majority of households will see energy bills fall from April 1 – with some enjoying much bigger savings than others

Millions of households will find out on Wednesday just how much their energy bills will fall by from April.

Regulator Ofgem is updating its price cap, which it does every three months – and impacts bills for the vast majority of customers: those who remain on so-called standard variable tariffs.

But this time is different as it takes into account the £150 discount announced by Chancellor Rachel Reeves in the Budget to ease the cost of living squeeze. Here we explain what it will mean for you.

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What might the new cap be?

Industry experts Cornwall Insight is forecasting it will drop by £117 to £1,641 a year for a typical dual fuel household. It’s important to remember the cap is the maximum amount energy suppliers can charge you for each unit of energy and the standing charge. Your overall bill depends on usage.

There’s a few reasons why it’s not the much heralded £150 a year saving. Firstly, that was based on removing two key policy costs – the Energy Company Obligation and Renewables Obligation – and dividing it evenly across all households.

A more accurate saving for a typical household is £134. But, at the same time, other costs are being added to the bills. Those include a chunky rise in electricity standing charges.

Will all households save about the same?

Almost all – 98% – will see bills fall. But the savings depend on your usage.

Think tank the Resolution Foundation estimates 7.5 million households will save less than £100. At the other end, 6.8 million will be more than £200 better off, and 1.8 million more than £300.

It will disproportionately benefit households with the largest bills, typically those with electric heating, larger families or high levels of electricity demand, which could be for medical or health reasons.

But reducing the unit rate – rather than the standing charge of the bill – will disappoint those don’t use much energy, yet have to pay the daily charge whatever.

I’m on a fixed energy deal, what about me?

There are about 34 million standard variable tariffs customer accounts, including six million with prepayment meters. But around 21 million are on fixed tariffs, so not impacted by Ofgem’s price cap.

There had been confusion over how the Budget announced saving would apply. The government has since said: “We expect these savings to be passed on to customers on fixed tariffs from April 2026.”

Is the Budget saving a one-off?

The biggest benefit is in the first year, from April, but continue to some extent for three years. However, it will lessen because of the timing of the policy measures scrapped and other costs that will keep being added to bills to pay for things like the renewables push and customer debts.

Nevertheless, the Resolution Foundation still thinks annual bills will remain around £60 below current levels through to 2029.