Welcome news arrived for millions of UK households at the start of April 2026 as the Ofgem energy price cap fell to £1,641 per year for a typical dual-fuel home paying by direct debit. The new cap, running from 1 April to 30 June 2026, represents a reduction of £117 — roughly 6.6% — compared to the previous quarter’s £1,758, working out to around £10 less per month.
Why Has the Price Cap Fallen?
Ofgem adjusts the cap quarterly based on wholesale energy costs in the preceding period. The fall primarily reflects lower wholesale gas prices recorded in late 2025 and early 2026, before the Iran war began pushing energy markets higher again in March. The government also contributed by removing green levies worth approximately £150 from a typical annual bill — though this saving was partially offset by new network cost charges of around £65 per household needed to fund essential grid upgrades. The net government-related saving is therefore approximately £85.
How Much Will You Actually Save?
The average direct debit customer will pay around £117 less per year than in the previous quarter — roughly £29 across the three months from April to June, or just under £10 per month. However, context matters: energy bills remain significantly higher than before the 2021-22 energy crisis, and the pre-crisis norm for the price cap was around £1,000-£1,100. Current bills are still roughly 50% higher than that baseline even after the April reduction.
Could Bills Rise Again?
Analysts at Cornwall Insight have warned the relief may be short-lived. Wholesale energy prices rose sharply after the Iran war began in late February and the Strait of Hormuz closed. While the two-week ceasefire agreed on 7 April has eased some immediate pressure, the US Energy Information Administration warned this week that fuel prices globally could keep rising for months even after the Strait fully reopens. The July-September price cap could be higher if market conditions remain volatile.
Fixed Tariff Options
With future cap levels uncertain, some households may benefit from locking in a fixed-rate tariff. One- and two-year fixed deals are available from multiple suppliers. Given current uncertainty, comparing deals through Uswitch or MoneySupermarket is worthwhile — particularly for higher-than-average energy users. Prepayment meter customers are automatically protected by the cap and need take no action.
Government Support Schemes Available
- Warm Home Discount: £150 rebate applied directly to bills for eligible low-income households
- Winter Fuel Payment: Now means-tested; available to pensioners on Pension Credit or certain qualifying benefits
- Energy Company Obligation (ECO4): Funding for insulation and heating upgrades for eligible lower-income homes
When Is the Next Change?
Ofgem will announce the next quarterly cap — covering July to September 2026 — in late May. Analysts expect it to be broadly similar to the current level or potentially slightly higher, depending on how quickly Middle East tensions ease and global energy markets stabilise. Households on standard variable tariffs will be affected automatically when the new cap takes effect on 1 July.