What happened
In a recent announcement, the UK government revealed plans to reduce energy bills for households starting from April. This initiative includes an average cut of £150 off energy costs, achieved by ending the Energy Company Obligation scheme and removing 75% of costs associated with the Renewables Obligation scheme. As a result, energy regulator Ofgem has confirmed a 7% decrease in the energy price cap, which limits the amount customers on standard variable tariffs pay for gas and electricity.
Why it matters
This reduction is significant as it will benefit millions of households across Britain, providing financial relief amid ongoing concerns about the cost of living. The government has emphasized that these savings will be automatically applied to energy bills from 1 April, requiring no action from consumers. Households on standard variable tariffs will see the savings reflected in their unit rates for gas and electricity, while those on fixed price tariffs will also receive the full benefits of the cuts.
What’s next
Moving forward, energy suppliers will contact customers to confirm the details of the new rates. The Prime Minister has welcomed this reduction as a crucial step in addressing high energy costs and has committed to further actions aimed at ensuring affordable energy for all. Additionally, the independent Resolution Foundation forecasts that typical energy bills will be approximately £200 lower in real terms throughout 2026 compared to 2024.
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