Household energy bills are forecast to fall by around £117 from April as government policy changes outweigh modest increases in wholesale prices.
Energy consultancy Cornwall Insight predicts the Ofgem price cap for a typical dual-fuel household will fall by 7 per cent to £1,641 a year when it resets on April 1.
The forecast cut is slightly smaller than Cornwall Insight’s previous estimate of a cut of 8 per cent, or £138, reflecting a recent rise in wholesale energy prices. Ofgem is expected to confirm the official cap for the period up to June 30 by February 25.
The forecast fall follows measures announced by Rachel Reeves in last November’s budget, including the scrapping of the Energy Company Obligation scheme. Cornwall Insight estimates that these policy changes will reduce the cap by around £145 per year when VAT and discounts are taken into account.
However, higher network charges related to the operation and maintenance of the UK’s energy infrastructure have offset some of the savings.
Wholesale gas prices have been volatile in recent weeks due to geopolitical tensions, but are still below levels prevailing when the price cap was set in January. Cornwall Insight expects bills to remain “relatively stable” for the remainder of 2026, with only a modest rise forecast for July.
Craig Lowrey, principal adviser at Cornwall Insight, said: “Any reduction in bills is a positive, particularly at a time when affordability is key. Most of the brunt will be in reducing insurance costs and although wholesale prices have grabbed the headlines, their impact on April bills is limited.”
He warned that keeping bills down will be a challenge as the UK invests in modernizing its energy networks and reducing reliance on imported gas. “There needs to be an honest conversation about the fact that the transition to a more secure energy system will not be free,” he said.
A spokesman for the Department of Energy Security and Net Zero said the government was sticking to its promise to cut average household costs by £150 from April.
Comparison site Uswitch said all households would see bill adjustments, regardless of provider or plan type. However, it was stressed that savings would depend on individual consumption levels, with higher consumption households seeing larger reductions.
Simon Francis, from the End Fuel Poverty Coalition, urged consumers to look beyond the overall average and consider flat rates and base charges when the final cap is announced.
While the forecast decline offers short-term relief, analysts warn that structural pressures on the energy system mean long-term stability remains far from guaranteed.
