What happened?
The UK government announced in the Autumn Budget that it would reduce the cost of living by cutting an average of £150 off energy bills starting in April. This reduction will be achieved by ending funding for the Energy Company Obligation scheme and removing 75% of costs associated with the Renewables Obligation scheme from consumers’ energy bills. Consequently, 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 change is significant as it will benefit millions of households, with the average energy bill expected to fall by £10 per month. The new average annual dual-fuel bill will drop to £1,641 from £1,758. The reduction is attributed to the government’s decision to shift or eliminate certain green levies, although the savings are less than initially promised due to increased costs in running the energy network. Customers on standard variable tariffs will see these savings automatically applied to their bills starting April 1, while those on fixed price tariffs will also receive the full benefit of the reductions.
What’s next?
Households do not need to take any action to claim these savings; they will be automatically reflected in energy bills. Energy suppliers will contact customers to confirm new rates. Additionally, initiatives like Switch Together Energy are available to help residents explore further savings through collective energy deals, offering access to exclusive tariffs backed by renewable electricity. This program aims to provide better value and protection against future price rises.