UK energy bills to fall in April 2026

UK households are expected to see meaningful relief on their energy bills from April 2026, with new forecasts suggesting annual costs could fall by more than £100 for the average home. The change follows government decisions to remove certain policy costs from energy bills and fund them through general taxation instead.

Energy analysts now believe the typical dual-fuel household will pay around £1,620 a year from April, down from current levels. If this forecast proves accurate, it would mark the largest drop in household energy bills in two years and bring costs down to their lowest level since mid-2024.

What makes this reduction significant is that it is not mainly driven by falling wholesale gas prices. Instead, it reflects a shift in how energy-related policies are paid for. Over recent years, policy and infrastructure costs have become a larger part of energy bills, meaning government decisions now have a greater impact on what households pay.

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Why were energy bills expected to rise before this forecast changed?

Earlier forecasts suggested energy bills would increase again from April 2026 when the next energy price cap period begins. At the time, analysts expected higher infrastructure and policy charges to offset any easing in wholesale energy prices.

Updated modelling from Cornwall Insight shows that this outlook has changed following measures announced in the autumn budget. Some costs that were previously added directly to household energy bills are now being funded through general taxation instead.

As a result, the overall level of charges passed on to consumers is expected to be lower than previously predicted, reversing earlier expectations of an April increase.

What will happen to energy bills between January and March 2026?

Before the expected fall in April, energy bills will rise slightly at the start of 2026.

Between 1 January and 31 March 2026, the typical annual dual-fuel bill is forecast to increase from £1,755 to £1,758. While the rise is small, it highlights how energy costs can still go up even when wholesale prices are relatively stable.

This short-term increase is mainly linked to policy and system costs rather than the underlying price of gas and electricity. In recent years, these non-energy costs have accounted for a growing share of household bills.

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Why do policy costs now matter more than wholesale prices?

For many years, wholesale gas and electricity prices were the main drivers of changes in household energy bills. That shifted after the energy crisis, when additional charges were introduced to fund energy efficiency schemes, renewable energy support, and infrastructure upgrades.

Today, a typical energy bill is made up of several parts:

• The cost of energy itself
• Network and infrastructure charges
• Environmental and social policy costs
• Supplier operating and administrative costs

As wholesale prices have become less volatile, policy and infrastructure charges now make up a larger proportion of bills. This means government decisions about how these schemes are funded can directly affect household energy costs.

Which policy costs are being removed from energy bills?

The forecast fall in April is mainly due to the removal of certain policy costs from household bills and the decision to fund them through general taxation instead.

What happened to the Energy Company Obligation scheme?

The Energy Company Obligation, often known as ECO, was designed to fund insulation and energy-efficiency improvements for lower-income households. The cost of the scheme was added to energy bills across the country.

Under the new policy approach, ECO costs are no longer being recovered directly through consumer energy bills. Instead, funding for similar support is expected to come from general government spending.

Why are renewables obligation costs being shifted?

Renewables obligation costs are used to support electricity generated from renewable sources such as wind and solar. These costs have traditionally been passed on to households through their electricity bills.

Around 75% of these renewables obligation costs are now being removed from bills and funded through taxation. This change significantly reduces the policy-related portion of household energy costs.

Are national grid charges also changing?

Forecast increases in national grid and network charges have come in lower than expected. While these costs have not been removed entirely, the smaller increase helps reduce upward pressure on bills.

How much could households save from April?

Based on current forecasts, the average annual energy bill for a typical dual-fuel household could fall by around £138 from April 2026. This is broadly in line with government statements suggesting savings of around £150 a year as a result of cutting energy levies.

If the forecast is correct:

• Bills would fall by roughly 8%
• Annual costs would be at their lowest since July 2024
• The reduction would be the largest fall in two years

Households on standard variable tariffs covered by the price cap would benefit automatically, without needing to take any action.

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Typical UK energy bill before and after April 2026

Note: Figures are based on forecasts for a typical household and may change when the official price cap is confirmed.

What did the government say about cutting energy levies?

Chancellor Rachel Reeves said the government’s aim was to reduce household bills while continuing to fund energy efficiency and renewable energy programmes.

By moving certain costs into general taxation, the government can spread the burden more evenly rather than linking it directly to energy consumption. This approach is also intended to ease pressure on lower-income households, who typically spend a higher proportion of their income on energy.

How does the energy price cap work?

The energy price cap is set by the UK’s energy regulator, Ofgem, and limits how much suppliers can charge per unit of gas and electricity for customers on default tariffs.

The cap is reviewed every three months and is based on:

• Wholesale energy prices
• Network and infrastructure costs
• Policy and environmental charges
• Supplier operating costs

The cap also includes a daily standing charge, which covers fixed costs such as maintaining energy networks and customer services, regardless of how much energy a household uses.

The price cap does not limit the total bill a household pays. Instead, it controls unit rates and standing charges, meaning households that use more energy will still pay more overall.

The official cap for April to June 2026 will be announced on 25 February 2026.

Does a falling price cap mean energy is now cheap?

While falling bills will bring some relief, energy remains more expensive than it was before the energy crisis. Even after the expected April reduction, households will still be paying more on average than in the early 2020s.

The price cap is also a maximum level rather than the cheapest available option. Many fixed tariffs can be priced below the cap, depending on market conditions. This is why some households continue to compare energy prices to see whether switching could reduce their costs further.

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Could energy bills fall again later in 2026?

According to Cornwall Insight, a further reduction in energy bills is possible in July 2026. However, this depends on several factors, including:

• Wholesale gas prices through spring and summer
• Updated forecasts for network costs
• Any new government policy decisions

Much of the uncertainty now centres on the next price cap, which will reflect updated wholesale costs alongside the impact of policy changes announced in the budget.

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What does this mean for households on fixed tariffs?

Households on fixed energy deals will not automatically benefit from changes to the price cap. Their costs depend on the terms of their contract.

Some fixed tariffs may already offer good value, especially if they were taken out when prices were lower. In other cases, new fixed offers may become more competitive as the cap falls.

As markets stabilise, suppliers may begin offering more cheap energy deals below the capped rate, particularly for customers willing to fix their prices for a set period.

Why energy forecasts still matter when prices are falling

Energy forecasts help households plan budgets and decide whether to stay on their current tariff or switch. They also influence how suppliers price new deals and which energy tariffs are available.

Even during periods of falling prices, forecasts can change due to:

• Global energy market movements
• Weather-driven demand changes
• Future policy announcements

Locking into cheap energy deals when they appear can help protect households against future price rises if conditions change.

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Correct as of 31 December 2025

FAQs about UK energy bills falling in April 2026