Biggest savings will be for higher electricity users – Martin Lewis
The biggest savings will be for higher electricity users.
Martin Lewis, founder of MoneySavingExpert.com, said the biggest reduction affects electricity unit rates, while the rates of the cheapest fixes will fall too. Here’s his quick briefing:
New 1 April Price Cap average UK direct debit rates:
Electricity unit rate 24.67p/kWh (was 27.69p) DOWN 10.9%
Electricity standing charge 57.21p/day (was 54.75p) UP 4.5%
Gas unit rates 5.74p/kWh (was 5.93p) DOWN 3.2%
Gas standing charge 29.09p/day (was 35.09p) DOWN 17.1%
The price cap is only on firms’ standard variable tariffs (which over 60% of homes are), the default ones you’re on if you’ve never switched or your fix deal ended and you did nothing. If you’re fixed, or on a special tariff, you’re not on the price cap.
Q. Why is this happening? Most of the reduction is because two policy costs have been taken off bills (ECO scheme ended, and for three years 75% of Renewable obligation will be shifted to general taxation). This is the government’s ‘£150 off bills’ (though in reality it’s a reduction in unit rates so the exact amount saved depends on usage).
Q. What’s happening to fixes? Most existing fixed deals will also fall on 1 April with the cheapest dropping typically 7% to 9%, usage dependent. This unprecedented move is because the change is due to the policy costs which come off all bills.
It’s only ‘most’ because some smaller companies were exempt from the ECO scheme so the reduction on their fixes will be smaller (as they weren’t on it so scrapping it doesn’t change anything there).
Q. Is it time to fix if I’m on the price cap? That’s by far the simplest way to save. The cheapest fixes currently are 14% less than the current price cap. And as they will drop in April by in many cases more than the price cap that differential will remain.
Q. What’s the price cap prediction for the rest of the year? As the reduction of policy costs is ongoing, the April cap is new bench-line. While it’s still crystal ball gazing the further out you go, most analysts are predicting it will stay within a couple of percent of that level for the rest of the year.
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Here’s more reaction:
Angharad Hopkinson, political campaigner for Greenpeace UK, said:
Stripping out levies from our bills will help struggling households, but significantly less than it should, because the cost of electricity is still set by volatile global gas prices.
The government’s efforts to make energy more affordable could be wiped out by another gas price spike. People are crying out for lower energy bills, and the government must do more to help them by stopping gas from setting the price we pay for electricity.
Energy analysts Cornwall Insight said on X:
The price cap is falling in April, but will this trend continue?
— Cornwall Insight (@CornwallInsight) February 25, 2026
Ofgem has confirmed exactly what we forecast - the price cap for April-June 2026 will be falling to £1,641 per year for a typical dual-fuel household, a saving of £117, or 7%, on current bills. This will bring… pic.twitter.com/T7GcVPUHLp
Starmer says 'more to do' to bring down cost of living
The UK prime minister and chancellor have both commented on the drop in the UK energy price cap. Keir Starmer said:
Energy bills are at the front of everybody’s mind, and I know they’ve been too high for too long.
I promised to bring bills down and I meant it. And today – because of the actions this government took at the last budget – the price cap on energy bills has come down by £117.
That means lower energy bills for millions across the country, but I know there is more to do and my government is pulling every lever to bear down on the cost of living and protect the pound in the pockets of working people.
The cut, which will provide some relief to stretched household finances, follows the November budget, in which the chancellor, Rachel Reeves, shifted some green energy costs away from household bills and into general taxation.
She shifted the levies used to support renewable energy projects into general taxation, and scrapped a bill payer-funded energy efficiency scheme.
Reeves said:
Cutting the cost of living is this government’s number one priority and I know energy bills are one of the biggest concerns, that’s why at the budget I said we would bear down on energy bills.
We are cutting the cost of living, cutting the national debt and creating the conditions for growth and investment in every part of the country.
It is the right economic plan to build a stronger and more secure economy.
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It is the lowest price cap rate since October 2024, but experts are saying that some fixed tariffs are better.
However, energy prices remain more than £500 (44%) higher than when the price cap was first introduced in 2019.
Experts at MoneySuperMarket are warning customers not to fall for the “price cap trap,” saying that several fixed deals on the market are still cheaper than the new cap rate, and calling the cut a “sticking plaster”.
Their analysis shows there are already several better fixed tariffs on the market, with a number of fixed deals beating both the current and April cap rate.
Kara Gammell at MoneySuperMarket Energy said:
Today’s announcement will come as welcome news for families across the country and represents a significant cut to household energy bills. However, much of this reduction comes from adjustments to green levies, rather than energy costs themselves getting cheaper for customers.
In fact, some energy bosses are predicting that by 2030 UK electricity costs could be even higher than the peak of the energy crisis in 2022. This makes today’s news something of a sticking plaster and doesn’t necessarily mean energy prices will continue trending downwards.
It’s important to remember that the energy price cap isn’t a deal, it’s the maximum suppliers can charge for a standard variable tariff.
Right now, there are fixed deals available that may offer savings compared with the current price cap, depending on your usage and circumstances. So, don’t fall for the ‘price cap trap’, be vigilant, shop around and switch if you find a better deal that works for you.
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Introduction: British energy bills to fall by £117 a year
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Energy bills in Great Britain will fall by £117 to a typical annual bill of £1,641 from April, the regulator Ofgem announced this morning.
It announced a 7% reduction of the energy price cap for the period covering 1 April to 30 June.
This change amounts to a reduction of about £10 a month for the average household using both electricity and gas, Ofgem said. This is more than £200 lower than a year ago.
Tim Jarvis, director general in charge of markets at Ofgem, said:
Today’s announcement will be welcome news for many households. Wholesale energy prices have fallen in recent months, and we’re investing in our network to safeguard the future energy system. The main driver of today’s reduction is the change to policy costs announced by the chancellor in the budget.
We’re also seeing encouraging signs of greater engagement and competition, with switching increasing by almost 20% year on year. More households are choosing time‑of‑use tariffs that offer cheaper off‑peak rates, and suppliers are offering a wider range of products, including deals with savings at evenings or weekends.
Gold prices climbed 1% as investors sought out out safe-haven assets amid continued uncertainty over new US tariffs. Donald Trump ’s new global tariffs took effect at 10% for 150 days on Tuesday, but Washington was working to raise it to 15%, according to a White House official, as the US president had threatened on Saturday.
Spot gold rose to $5,198 an ounce, after closing more than 1% lower on Tuesday when investors locked in profits.
Iran is edging closer to a deal with China to buy anti-ship cruise missiles, Reuters reported, as Tehran and Washington are set to hold a third round of nuclear talks in Geneva on Thursday.
Trump proclaimed his first year in office a success at the State of the Union address on Tuesday night, even as his presidency is dogged by low public approval ratings before November’s midterm elections in which voters could hand control of Congress back to his Democratic opponents.
He gave the longest-ever State of the Union speech, lasting almost 1 hour and 50 minutes – a speech that was interspersed with falsehoods and exaggerations but light on new policy proposals.
The president briefly set out his case for a possible attack on Iran, saying he would not allow the country to have a nuclear weapon.
The Agenda
10am GMT: Eurozone inflation (final) for January
2.15pm: Treasury committee to question former OBR chairs Richard Hughes and Sir Robert Chote
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