UK energy bills are dropping by £117 as the government ditches green levies – here’s how much you’ll save
UK energy bills are set to drop by £117 annually for a typical household starting 1 April 2026, as the government’s decision to shift funding for certain green and social schemes from consumer bills to general taxation takes effect, according to the latest update from regulator Ofgem.
The energy price cap, which limits what suppliers can charge millions of households on standard variable tariffs, will fall by 7% to an average of £1,641 per year for a dual-fuel (gas and electricity) household paying by Direct Debit. This equates to roughly £10 in monthly savings.
The change applies from 1 April to 30 June 2026, and covers England, Scotland, and Wales.
Ofgem announced the adjustment noted that the primary driver for the drop is a policy shift announced in the recent budget. The government is ending or moving funding for two environmental and social schemes to general taxation starting April 2026, originally projected to save households an average of £150 annually. However, this relief has been partially offset by other rising costs, particularly network expenses.
Global wholesale energy prices have fallen, contributing a £38 annual reduction in the latest quarterly review. But network costs under the new RIIO-3 framework, which funds infrastructure upgrades for the power and gas grids, have increased by £66 per year, tempering the overall drop.
Additionally, the Warm Home Discount scheme’s costs are shifting from standing charges to unit rates from April.
Key rate changes under the new cap (including 5% VAT, averaged across regions):
- Electricity: 24.67 pence per kWh unit rate; 57.21 pence per day standing charge.
- Gas: 5.74 pence per kWh unit rate; 29.09 pence per day standing charge.
The £1,641 figure is based on typical household consumption patterns. Actual bills will vary depending on usage, location, meter type, and payment method. Households on prepayment meters or other tariffs may see different impacts.
This marks a notable relief compared to recent years, with the new level 11% (£208) lower than the same period in 2025.
Ofgem noted that the reduction will be welcome news for many households amid ongoing cost-of-living pressures, though experts caution that future volatility, such as geopolitical risks affecting energy markets, could influence upcoming caps.
The next price cap announcement, for July to September 2026, is due by 27 May, though Ofgem may update earlier if significant changes occur. The regulator is also piloting a lower standing charge tariff starting April 2026 with select suppliers (EDF, E.ON, Octopus, and British Gas) for eligible low-energy users, aiming to offer more tailored options.
