Household energy bills expected to fall by £117 – Daily Business

Cuts to green levies by the UK government will mean cheaper energy prices for most households from April.

Ofgem, the energy regulator, is expected to announce a £117 (7%) reduction in the price cap on standard tariffs next week, taking a typical annual bill to £1,641 from rom £1,758 a year under the current cap, says the consultancy Cornwall Insight.

Chancellor Rachel Reeves said in her Budget in November that bills would fall by £150 by scrapping home insulation scheme, the Energy Company Obligation, and moving some of the costs of subsidising renewable energy projects into general taxation.

Cornwall Insight said the savings have been offset by increased levies to fund the operation and maintenance of Britain’s gas and electricity networks.

The expected 7% cut is also slightly higher than its previous 8% forecast because of an uptick in wholesale prices since the end of last year.

If energy bills fall as forecast, they will still be a third higher – about £425 a year – than they were before Russia’s invasion of Ukraine triggered an energy market crisis across Europe.

This is a result of the cost of importing more gas by tanker from the US and the Middle East, and the higher costs of the UK’s energy transition.

Even so, the cut in the cost of energy follows yesterday’s fall in in inflation and comes a week before a crucial by-election in Greater Manchester.

Craig Lowrey, the principal consultant at Cornwall Insight, said: “Any reduction in bills is positive, easing pressure at a time when affordability really matters.”

However, he warned that it “won’t be easy” to keep bills down because of the need to invest in energy networks and infrastructure and reduce reliance on imported gas.

“The real test will be keeping those savings going,” he said. “Investment is needed if we want an energy system that is more secure and resilient, after the consequences of exposure to global energy markets were made all too apparent in recent years. However, there needs to be an open conversation about the fact that such a transition will not be cost free.”

The Department for Energy Security and Net Zero said: “This government is delivering on our promise to take an average of £150 of costs off bills from April 1. Ofgem will set out the final price cap figure in the usual way next week.”