Energy worth cap is about to fall in April however standing fees will rise AGAIN

Millions of households are on track to see their energy bills fall in April, but they will pay more in standing charges as the cost of operating energy networks soars.

The energy price cap is forecast to fall from £1,758 to £1,641, a £117 fall, from 1 April 2026, according to expert forecaster Cornwall Insight. 

The 7 per cent fall is largely driven by policy measures announced in November’s Autumn Budget. 

These included shifting 75 per cent of the Renewables Obligation costs from household energy bills into general taxation, and the decision not to extend the Energy Company Obligation (ECO) beyond March 2026. 

Cornwall Insight said policy changes will reduce the cap by around £145 a year, but higher standing charges mean bills are higher than they should be.  

Electricity standing charges will increase by nearly 10p a day from 54.75p to 64p, while gas charges will rise from 35.09p to 36p. 

The forecasters said hikes in the charges associated with the operation and maintenance of energy networks have offset part of the savings generated as a result of policy changes announced in the Budget. 

Cornwall Insight said: ‘Despite this rise, the comparatively lower prices seen in the final weeks of 2025 mean the wholesale cost element of the cap is still down compared with the January cap.’

It means that even with policy changes, energy bills are still higher than when Labour came to power in July 2024, when the price cap was £1,568. 

Rachel Reeves will next month end the ECO scheme, which requires energy suppliers to pay for insulation and heating upgrades in the homes of people deemed to be living in fuel poverty. 

Meanwhile, the cost of the Renewables Obligation scheme, which was created to bolster renewable electricity generation in Britain, will be shifted towards general taxation. 

The costs incurred by electricity businesses in investing in renewable electricity generation were previously 100 per cent funded via consumers through policy costs included energy bills. 

After two consecutive quarter-on-quarter increases in the cap, the anticipated decline will be welcome news for millions of households.

Looking ahead, Cornwall Insight said it expected the price cap to remain ‘relatively steady’ throughout 2026, with only a small rise forecast in July. However, it said its predictions might change as wholesale markets shift and potential policy cost announcements happen.

Around 65 per cent of homes in England, Scotland and Wales are on a standard variable energy bill tariff. The price of these tariffs is controlled by the energy price cap. 

The energy price cap changes every three months, meaning it is important for households to keep track of it and determine how it will affect their bills.  

Dr 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.

‘The real test will be keeping those savings going. That won’t be easy as the UK continues to upgrade its networks and infrastructure.’

He added: ‘Ultimately a move to homegrown energy gives us a stronger chance of eventually achieving price stability, while providing greater energy security in the process.’  

How to beat the price cap 

With so much uncertainty about where energy prices might be in 2026, Ofgem has urged customers to opt for a fixed tariff to reduce their bills.

Customers who switch to a fixed deal can save an average of £250 a year, according to Uswitch. 

Uswitch says that there are 27 fixed deals cheaper than the current price cap, so it’s worth comparing tariffs to see if you can save money. 

Outfox Energy is offering customers two 12-month deals, which offer savings of £250 and £249 against the January price cap. Even if the price cap falls in April, as expected, customers will save around £133.