Household energy bills are forecast to fall by around £117 from April, as the government policy change will more than offset a slight rise in wholesale prices.
Energy consultancy Cornwall Insight estimates the Ofgem price cap for a typical dual-fuel household will fall by 7 per cent to £1,641 a year when it resets on April 1.
The forecast cut is slightly less than Cornwall Insight's previous estimate of a cut of 8 per cent or £138, reflecting the recent increase in wholesale energy prices. Ofgem is due to confirm the official cap level by 25 February for the period running until 30 June.
The projected fall follows measures announced by Rachel Reeves in last November's Budget, including scrapping the energy company liability scheme. Cornwall Insight estimates that these policy changes will reduce the border by approximately £145 per year after including VAT and valuation allowances.
However, higher network charges associated with the operation and maintenance of Britain's energy infrastructure have offset part of the savings.
Wholesale gas prices have been volatile in recent weeks due to geopolitical tensions, but remain below levels seen when the January price cap was set. Cornwall Insight expects bills to remain “relatively stable” for the rest of 2026, with only a modest increase forecast in July.
Craig Lowrey, principal consultant at Cornwall Insight, said: “Any reduction in bills is a positive, especially at a time when affordability matters. The fall in policy costs is having the biggest impact, and while wholesale prices have been in the headlines, their impact on April bills has been limited.”
He cautioned that keeping bills down will be challenging as the UK invests in modernizing its energy network and reducing reliance on imported gas. “There needs to be an honest conversation that the transition to a more secure energy system will not be cost-free,” he said.
A spokesperson for the Department for Energy Security and Net Zero said the Government was delivering on its promise to cut the average household's costs by £150 from April.
Comparison site Uswitch said all households would see adjustments to bills, regardless of supplier or tariff type. However, it stressed that savings would depend on individual consumption levels, with households with higher usage seeing larger reductions.
Simon Francis of the End Fuel Poverty Coalition urged consumers to look beyond the headline average figure and check unit rates and standing charges when the final cap is announced.
While the projected decline provides short-term relief, analysts warn that structural pressures on the energy system mean long-term stability is not guaranteed.
Amy Ingham
Amy is a newly qualified journalist specializing in business journalism with responsibility for news content at Business Matters, the UK's largest print and online source of current business news.