NEW YORK, January 2, 2026, 04:23 ET
- Cornwall Insight forecasts the UK’s energy price cap will fall 8% in April, cutting a typical annual dual-fuel bill to about £1,620.
- Ofgem’s cap for Jan. 1–Mar. 31 rose 0.2% to £1,758, driven by higher policy and supplier costs despite lower wholesale prices.
- The expected April drop is tied to budget measures moving some levies off bills and into general taxation.
Britain’s household energy price cap is forecast to fall by about 8% in April, cutting the typical annual dual-fuel bill by £138 to around £1,620, consultancy Cornwall Insight said.
The forecast offers a potential spring reprieve after the cap for Jan. 1 through Mar. 31 took effect on Thursday, lifting the annualised bill for a typical household paying by direct debit to £1,758 from £1,755.
The cap matters now because it sets the benchmark price for millions of households on “standard variable” deals as winter demand peaks. It limits the per-unit price and standing charge suppliers can levy, not the total bill, which depends on how much energy a home uses. https://www.ofgem.gov.uk/information-consumers/energy-advice-households/energy-price-cap-explained
Chancellor Rachel Reeves has made lowering energy costs a political priority, and the April forecast reflects a push to strip some policy charges off bills and fund them through general taxation instead.
Cornwall Insight said the main drivers are budget measures shifting 75% of Renewables Obligation (RO) costs into taxation and ending the Energy Company Obligation (ECO) after March.
The RO is a subsidy scheme that obliges electricity suppliers to source a share of power from renewable generation. ECO is an energy-efficiency programme that required large suppliers to help low-income households improve homes and cut heating bills.
The Department for Energy Security and Net Zero has said the levy changes are expected to take about £150 off the average household bill from April.
Cornwall Insight also cited an update from the National Energy System Operator on interim electricity Transmission Network Use of System charges, or TNUoS, which help fund building and running the grid.
Those charges are still expected to rise, but the consultancy said the increase per household is now £10 lower than previously forecast.
Wholesale energy prices have softened in recent weeks, helped by higher U.S. liquefied natural gas supply, reduced pressure from EU gas storage requirements and milder winter conditions, Cornwall Insight said.
“Costs aren’t vanishing, they’re shifting,” said Dr Craig Lowrey, principal consultant at Cornwall Insight.
The consultancy said it has not factored in a separate government consultation on moving Warm Home Discount costs from the standing charge to the unit rate. The Warm Home Discount is a rebate for eligible low-income households.
Cornwall Insight said bills are likely to keep edging lower into July, though it cautioned the outlook could change before Ofgem sets the April-to-June cap in late February.
Ofgem’s latest cost breakdown for the first quarter showed policy costs and supplier operating costs rising, offsetting a fall in wholesale energy costs.
