Price cap: Energy payments set to plummet from April – what it means for you | EUROtoday

Households are set to study their power payments will fall by round 7 per cent from April in a shake-up of prices after the federal government promised they’ll obtain a mean £150 reduce.

Latest predictions counsel Ofgem will scale back the power value cap by £117 to £1,641 a yr for a typical twin gas family from 1 April when it makes its announcement on Wednesday.

Chancellor Rachel Reeves mentioned in November that £150 can be reduce from the typical family invoice from April by scrapping the Energy Company Obligation (Eco) scheme launched by the Tories in authorities.

Customers have been warned to not anticipate a straight £150 low cost on their payments, and that the reduce will depend upon the scale and kind of family and the way a lot power it makes use of.

The discount is anticipated to be primarily utilized by a lower cost per unit of electrical energy used, with households suggested to look out for data from their provider explaining this after the worth cap announcement.

Cornwall Insight mentioned the modifications will scale back the cap by about £145 a yr as soon as VAT and pricing allowances inside the cap methodology are taken into consideration.

It added that will increase in prices related to the operation and upkeep of Britain’s power networks have offset a part of the financial savings.

Wholesale costs had additionally risen barely since its final forecast in December, with the price of fuel notably unstable as a consequence of “geopolitical factors”.

Looking additional forward, Cornwall mentioned wholesale prices have been nonetheless decrease than when Ofgem set the January cap degree and it anticipated the cap to stay “relatively steady” all through 2026, “with only a small rise forecast in July”.

Ned Hammond, deputy director of buyer coverage at Energy UK, which represents companies, mentioned: “At a time when many households are struggling with their bills, action taken by the Government to provide a considerable discount on energy bills is hugely welcome.

“While the saving will be £150 for the average household, it is important to note that the discount is applied to the unit rate. Therefore, households will experience significantly different savings depending on their energy consumption, some much higher and others substantially lower than £150.

“In addition, other moving parts, such as network charges and wholesale costs, mean energy bills will not necessarily fall in line with the saving provided. Indeed, the price cap is projected to drop by around £115 from 1 April.”

Which? power editor Emily Seymour mentioned: “Households can expect a significant cut to their energy bills in April, which will come as a relief to millions of people struggling with cost-of-living pressures.

“The bulk of this change is expected to be applied to your electricity price per unit, so your exact savings will depend on your usage; look out for communications from your energy provider in the coming weeks to see how it will affect your bills.”

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, urged households to notice the modifications in unit prices and standing prices, slightly than deal with the headline “average energy bill”.

He mentioned: “We know that energy bills can be confusing and trying to decide when to switch tariffs or change supplier is a big decision which can overwhelm people.

“As well as setting the price cap, Ofgem should play a greater role in ensuring that the tariffs reaching the market are fair and don’t discriminate against specific customer groups.

“Sadly the responsibility currently falls to households to pay careful attention to any changes in their unit costs and standing charges.”