Ofgem has announced its latest price cap, with energy bills set to fall from £1,758 to £1,641 for typical households from April 1
Energy bills are poised to drop for millions of households this spring following Ofgem’s announcement of its latest price cap. The price cap is tumbling from £1,758 to £1,641 for the average household from April 1 – a decline of 7%, or £117. Nevertheless, the precise sum you pay depends on your gas and electricity consumption.
For every £100 you spend on energy, you will fork out roughly £7 less from April. The reduction stems from measures unveiled by the Government in the autumn Budget last November.
Chancellor Rachel Reeves disclosed that £150 would be slashed from energy bills from April by scrapping the Energy Company Obligation and Renewables Obligation.
Yet, some of this saving has been counterbalanced by other expenses that are tacked onto bills, including network maintenance. Wholesale prices have also climbed slightly, reports the Mirror.
Ofgem revises its price cap every three months, so the fresh rates will stay in effect until June 30, when it will then be adjusted once more.
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What is the Ofgem price cap?
Despite what its name implies, the Ofgem price cap does not impose a ceiling on what you can pay for energy – rather, it establishes the maximum unit rates and standing charges. The standing charge is a set fee you pay for grid connection.
This means your bill still depends on the amount of energy you consume, and it can be higher or lower than the headline price cap figure.
The price cap figure represents what the typical bill payer can expect to shell out, based on Ofgem’s estimates of the average household’s energy usage.
Your location can also influence your bill, as unit rates fluctuate depending on region. Different rates apply for prepayment customers and those who pay upon receipt of their bill.
Somewhat confusingly, the energy price cap figure denotes an annual bill, but it’s updated every three months so Ofgem can reflect shifting wholesale costs.
Who falls under the Ofgem price cap?
The Ofgem price cap applies to anyone on a standard variable rate (SVR) tariff. You’re likely on an SVR tariff if you’re not locked into an energy deal.
There are approximately 34 million standard variable tariffs customer accounts, including six million with prepayment meters. You can get in touch with your current energy supplier to find out what type of tariff you’re on.
How does Ofgem work out its price cap?
The largest cost contributing to the price cap is wholesale energy, which is what energy suppliers fork out for gas and electricity. The assessment period for wholesale energy prices for the April 2026 price cap was from 18 November 2025 to 17 February 2026.
There are other factors that are considered as well – for instance, maintaining pipes and wires that transport gas and electricity, network and operating costs, along with VAT, payment method allowances and profits for the energy supplier.
Ofgem will declare its July price cap by 27 May 2026.
Will energy bills continue to decrease?
Cornwall Insight stated earlier this month that wholesale prices have slightly increased due to “geopolitical factors” – but the group forecasts the price cap to remain “relatively steady” throughout 2026. They anticipate “a small rise” in energy bills in July.
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, whilst 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. That investment is needed if we want an energy system that is more secure and resilient.”
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