Energy price cap expected to fall by 7% in April

Household energy bills are set to fall by around 7% in April when the price cap is next updated, according to new forecasts from industry analysts.

Consultancy Cornwall Insight predicts that Ofgem will cut the energy price cap by £117, reducing the typical annual dual fuel bill to £1,641 from April 1. The projected drop is slightly smaller than its previous estimate of an 8% (£138) fall.

Ofgem will confirm the new cap level by February 25, covering the period from April 1 to June 30.

The expected reduction follows measures announced in the recent Budget. Chancellor Rachel Reeves said in November that scrapping the Energy Company Obligation (Eco) scheme — introduced by the previous Conservative government — would lower average household bills by £150 from April.

Cornwall Insight said that, once VAT and pricing allowances within Ofgem’s cap calculation are taken into account, the changes are likely to reduce the cap by around £145 a year. However, some of the savings have been offset by rising costs associated with operating and maintaining Britain’s energy networks.

Wholesale energy prices have risen slightly since Cornwall Insight’s last forecast in December, particularly gas, which remains volatile due to geopolitical factors. Despite this, wholesale costs are still lower than when Ofgem set the January price cap.

Looking ahead, analysts expect the cap to remain “relatively steady” through 2026, with only a small increase forecast in July.

If confirmed, April’s reduction would provide modest relief for households after a prolonged period of elevated energy costs.

Craig Lowrey, principal consultant at Cornwall Insight, said: “Any reduction in bills is positive, easing pressure at a time when affordability really matters.

“It’s the drop in policy costs, as a result of Government interventions, that is doing most of the heavy lifting and, while wholesale costs have come back into the headlines in recent weeks, the impact on April’s bills is minimal.”

He added: “Investment is needed if we want an energy system that is more secure and resilient, after the consequences of exposure to global energy markets were made all too apparent in recent years.

“However, there needs to be an open conversation about the fact that such a transition will not be cost free.”

A spokesperson for the Department for Energy Security and Net Zero said: “This Government is delivering on our promise to take an average of £150 of costs off bills from April 1.

“Ofgem will set out the final price cap figure in the usual way next week.”