The upcoming energy price cap adjustment by Ofgem is expected to lead to a decrease in energy costs starting April. As of April 1, 2026, the typical dual fuel household will see a reduction in their annual energy bill to £1,641 from the previous cap set at £1,758 on January 1, 2026.
Although this is the standard scenario, individuals can estimate their bill changes using their current energy bills through an interactive calculator. The price cap determines the maximum allowable charges for unit rates and standing charges, meaning actual bills could be above or below the capped amount.
The average gas unit rate is set to decrease from 5.93p per kilowatt hour (kWh) to 5.74p per kWh, with the standing charge dropping from 35.09p to 29.09p per day. For electricity, the average unit rate will reduce from 27.69p per kWh to 24.67p per kWh, while the standing charge will increase from 54.75p to 57.21p per day.
In response to the announcement, Tim Jarvis, Director General, Markets at Ofgem, highlighted that the drop in energy prices was influenced by decreasing wholesale energy costs and ongoing network investments to ensure future energy system stability. The adjustment in policy costs, as announced in the budget, played a significant role in the current price reduction.
Jarvis emphasized Ofgem’s commitment to controlling costs within its purview and facilitating investments necessary for a more resilient energy system in the long term. The shift towards increased consumer engagement and competition, evident in a nearly 20% year-on-year rise in switching, showcases a growing preference for time-of-use tariffs and a wider product range offered by suppliers, including deals with savings during off-peak hours.
While the price cap safeguards consumers from excessive energy expenses, it is considered a baseline protection measure. Consumers on fixed deals, on average, paid approximately £115 less than the cap last year. Ofgem encourages consumers to explore different tariff options and payment methods with their suppliers to potentially further reduce their energy bills.