The upcoming decrease in energy costs starting in April was announced by Ofgem through the new energy price cap. From April 1, 2026, the average dual fuel household will pay £1,641 annually for energy, reduced from the previous £1,758 set on January 1, 2026.
While this is the standard scenario, individuals can use their current bills to estimate the impact on their own expenses using an interactive calculator. The price cap establishes the maximum allowable charges for unit rates and standing charges, meaning actual bills could vary from the cap amount.
Gas prices are set to drop, with the average unit rate decreasing from 5.93p to 5.74p per kilowatt hour (kWh), and the standing charge going down from 35.09p to 29.09p per day. On the other hand, electricity costs are also falling, with the average unit rate reducing from 27.69p to 24.67p per kWh, while the standing charge is increasing from 54.75p to 57.21p per day.
Ofgem’s Director General, Markets, Tim Jarvis, noted that the reduction in prices is a result of lower wholesale energy costs and investments in the energy network. Policy cost changes announced in the budget were a significant factor in this adjustment. Ofgem’s focus remains on managing controllable costs and promoting investments for a more resilient energy system in the long run.
Increased engagement and competition in the energy market have been observed, with a nearly 20% rise in switching rates. Consumers are opting for time-of-use tariffs offering discounted off-peak rates, and suppliers are introducing a wider range of products, including savings during evenings or weekends.
While the price cap protects households from excessive charges, it is considered a safety net. Consumers on fixed deals paid around £115 less than the cap on average last year. Ofgem encourages consumers to explore different tariff options and payment methods with their suppliers to potentially lower their energy bills further.