Billpayers to start benefitting from an average of £150 off the
costs of energy bills from April onwards.
We announced in the Autumn Budget that we would cut the cost of
living, including by taking an average of £150 off the costs
of energy bills from April.
This will be done by ending funding for the Energy Company
Obligation scheme, as well as removing 75% of costs for the
Renewables Obligation scheme from people's energy
bills.
As a result, energy regulator Ofgem has now
confirmed the energy price cap for April – which limits the
amount customers on standard
variable tariffs pay for each unit of gas and
electricity – will fall by 7%.
This means millions of households will benefit from lower
energy bills.
What does this mean for me?
You do not need to do anything to claim the savings. These will
be automatically applied to your bill from 1 April onwards.
The exact amount each household saves will depend on how much
energy is used and the type of tariff.
Some smaller energy suppliers were never part of the Energy
Company Obligation scheme either, meaning their customers have
already benefitted from not paying these
costs.
If you are on a standard variable tariff
For energy used after 1
April, the savings will be applied to your unit
rate for gas and electricity.
Your energy supplier will contact you to confirm the
details of your new rates.
If you are on a fixed price tariff
Suppliers have confirmed that the savings will be
passed on in full to customers on fixed price
tariffs.
This means if you are already on a fixed price tariff on 1 April,
your tariff will be amended so that savings are applied to your
unit rates going forward. Your energy supplier will contact you
to confirm your new rates.
For anyone signing a new fixed price tariff after 1
April, we expect the savings to be taken into account.
If you are on a pre-payment meter
If you are on a smart pre-payment meter, your energy
supplier will automatically apply the savings to any energy used
from 1 April.
If you are
on a traditional pre-payment meter –
such as those which use a key or card, you
will benefit from the savings the first
time you top up your key or card after 1 April.
If you are on other types
of tariffs
Some examples of these include:
-
Tracker tariffs, where unit costs for gas and electricity
fluctuate daily to reflect live wholesale prices
-
Time-of-use tariffs, where the unit cost for electricity
changes depending on the time of day, with cheaper
rates offered during off-peak times like overnight
Some other tariffs do not charge for the Energy Company
Obligation or Renewable Obligation schemes,
meaning these customers have
already benefitted from not paying these
costs.
Where a tariff does include costs associated with either the
Energy Company Obligation or Renewable Obligation
schemes, the savings will be passed on from April.
How you receive the savings will depend on the specific tariff
you are on. For example, the impact may vary
across different times of day or pricing periods.
Your energy supplier will provide you with more information on
how these changes will work.
Why has the price cap fallen by £117?
The main reason energy bills will fall in April is because the
government has delivered on its promise to remove an average of
£150 of costs off bills.
The price cap takes account of several other factors too, the
single largest of which is the wholesale cost of energy, set by
global markets.
Other costs include those needed for upgrading our electricity
network by strengthening and modernising the grid, to power our
economy and keep Britain's lights on.
That is why taken together, the price cap for the typical dual
fuel household will fall by £117.
