Household energy bills to fall in April after charges shake-up
Typical household energy bills will fall by 7% in April, regulator Ofgem has announced, following a shake-up in charges by the government.
Nearly everyone in England, Wales and Scotland will benefit from a cut irrespective of their tariff, although the amounts will vary between households.
For millions of households on variable tariffs governed by the price cap, the drop will be about £10 a month for those using a typical amount of gas and electricity.
However, prices are still about a third higher than before the war in Ukraine, debts have ballooned, and billpayers are being urged to shop around for further savings.
The 7% fall in the price cap is the biggest drop since last summer. While the government promised a £150 a year reduction in April, the cost of running the energy network is up, leading to a lesser saving of £117 for a household using a typical amount of energy.
Chancellor Rachel Reeves told the BBC "we're beginning to turn a corner," saying the government was "putting more money in people's pockets," and improving public services.
But Conservative shadow energy secretary Claire Coutinho said Labour was "pulling the wool over people's eyes by moving some costs off of your energy bill and putting them straight onto your tax bill".
How bills work
Domestic gas and electricity bills are a complicated mix of charges for energy policy, costs to run the network, and the price of gas and electricity to run a home.
In November's Budget, Chancellor Rachel Reeves announced changes to policy costs.
She said the typical annual household energy bill would fall by £150, by scrapping the Energy Company Obligation (Eco) scheme introduced by the Conservatives, and moving some charges onto general taxation.
However, the cost of maintaining and strengthening energy networks - including power lines, cables and gas pipes - is rising by about £6 a month for a typical household, diluting the saving.
For a household governed by Ofgem's price cap, using a typical amount of energy, the annual bill will fall by £117 to £1,641. Without the government intervention, the price cap would have risen in April.
The cap is based on a "typical household" using 11,500 kWh of gas and 2,700 kWh of electricity a year with a single bill for gas and electricity, settled by direct debit.
Savings will vary
Crucially, the discount on each household's individual energy bill will depend on the size and type of household and how much energy it uses.
It will be primarily applied through a lower price per unit of electricity used. This means high electricity users, which may include vulnerable households with medical equipment, are likely to see the biggest benefit. Those who use little electricity and a lot of gas will benefit the least.
However, the changes to policy costs will also mean a reduction in bills for those on fixed deals. They will be contacted by their supplier in the coming weeks about the specific change to their tariff.
About 40% of homes are on fixed deals. Ofgem said it had enforcement powers if suppliers failed to pass on savings to these customers.
Reeves said it was "absolutely essential" savings were passed on to customers, who should "push back very firmly" if suppliers failed to do so.
Tim Jarvis, director general of markets at Ofgem, described the drop as "welcome news for many households".
"We're also seeing encouraging signs of greater engagement and competition, with switching increasing by almost 20% year on year," he said.
The wholesale cost of gas, which spiked after Russia's invasion of Ukraine four years ago and led to soaring household bills, remains relatively volatile and difficult to predict.
This makes it tricky to say what will happen to domestic energy bills later in the year, but energy consultancy Cornwall Insight is forecasting relatively little further change as the year goes on.
"This reduction in the cap will bring real relief to households after a prolonged period of pressure on their energy bills. However, our early view for July suggests that this is where the big falls stop," said its principal consultant Dr Craig Lowrey.
Experts have urged people to continue to monitor their energy use to keep costs down.
Eileen Jordan, from Ripon in North Yorkshire, said she and her husband had worked hard to keep on top of things.
Having contacted the BBC's Your Voice, she explained that they do not heat two bedrooms in their home, but said their finances were in good shape.
"How some people manage is beyond my comprehension," she said. "We are fortunate but only because we have been frugal."
While energy bills will fall in April, other bills will increase - meaning most people will continue to face a squeeze in the cost of living.
Water bills will rise sharply in some areas, council tax will go up, and various other household costs will increase. Some larger families will receive more in universal credit when the two-child benefit cap is scrapped.
Households struggling to make ends meet have fallen behind on energy payments, leading to a collective debt to suppliers of well over £4bn.
Dhara Vyas, chief executive of Energy UK, which represents suppliers, said companies can help.
"They are giving them different tariffs, extra help and support, offer white goods such as efficient fridges, but they can only do this if they know who is in your household and what your circumstances are," she said.
For those on the price cap, in specific terms in April:
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