Energy bills to fall by £117 from April

Ofgem energy price cap falls by 7% to £1,641 a year as government axe green levies and shifts subsidy costs to taxpayers

Emily Gosden, Energy Editor | Aubrey Allegretti, Chief Political Correspondent

Wednesday February 25 2026, 9.15am GMT, The Times

Energy prices for most households in Britain will fall by 7 per cent from April, cutting £117 from a typical annual bill, after Ofgem updated the price cap.

The reduction will leave a household with average consumption paying £1,641 a year for their energy, the regulator said.

The fall is primarily the result of the government’s cuts to green levies on bills, announced in the Budget.

Ministers have scrapped the Energy Company Obligation, a widely-criticised home insulation scheme, and temporarily shifted most of the costs of subsidising old renewable energy projects into general taxation.

Rachel Reeves, the chancellor, said at the time that the changes would cut £150 from the average annual household energy bill from April.

However, analysts had warned that these savings would be offset by increased levies to fund maintenance and upgrades to Britain’s gas and electricity networks.

Cornwall Insight, the respected energy consultancy, had predicted that this would result in a drop of 7 per cent or £117 a year in the price cap.

Tim Jarvis, Ofgem’s director general of markets, said: “Wholesale energy prices have fallen in recent months, and we’re investing in our network to safeguard the future energy system. The main driver of today’s reduction is the change to policy costs announced by the chancellor in the budget.

“We’re also seeing encouraging signs of greater engagement and competition, with switching increasing by almost 20 per cent year on year. More households are choosing time‑of‑use tariffs that offer cheaper off‑peak rates, and suppliers are offering a wider range of products, including deals with savings at evenings or weekends.”

Ed Miliband, the energy secretary, admitted many households had faced an “affordability crisis” stretching back as far as the 2008 financial crash and repeated his pledge to reduce bills by 2030.

Miliband told BBC Breakfast: “We said at the election that we would get bills down by up to £300 by 2030. We said that because we care so much about the affordability crisis that people are facing.

“I do not think this is job done. I think this is an important milestone for us, but we have further to go in the decisions that we take.”

He defended the government’s decision to stop all new oil and gas licences being granted to expand drilling in the North Sea.

“However much drilling we do in the North Sea doesn’t lower energy bills by one penny, because the price is set on the international market,” he told Sky News. “The only way we get energy security is with our mission for homegrown clean power.”

The price cap was introduced in 2019 and limits maximum prices for standard variable and prepayment meter tariffs. It was designed to prevent suppliers from ripping off households who don’t shop around for cheaper deals. Ofgem updates the cap level every three months based on its assessment of the costs efficient suppliers should incur.

Households who are on fixed tariffs should also see their bills fall in April as the government has instructed suppliers to pass on savings from the budget measures to these customers too.

Peter Smith, director at the charity National Energy Action, said: “Any fall in sky-high energy bills is welcome. Hopefully, it can take a little pressure off households who have been struggling in cold, unhealthy homes this winter.

“But the new level is still far from affordable. Those on the lowest incomes in the leakiest homes will face deep debt and will still struggle to stay warm and well at home.”

The Energy Company Obligation scheme was supposed to help households save money by providing them with home insulation to cut their energy usage. However, a damning report by the National Audit Office last year found that almost all homes insulated through the scheme had had botched work done and needed to be fixed to stop them growing damp and mouldy.

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