7% from April 1, 2026, with the average annual bill lowering to £1,641, according to forecasts. The reduction of approximately £117 per year is driven by an Ofgem price cap update and government action to remove certain green levies from bills. However, recent events in the Middle East could drive bills back up by £160 from July, making them more expensive than before the cut.
Forecasts for Ofgem's price cap for July to September have soared to £1,801 a year for a typical dual fuel household, according to Cornwall Insight analysts. The July price cap is an increase of £160 or 10% on April's cap. The government has taken an average of £150 off energy bills from April, according to a Department for Energy Security and Net Zero spokesperson, who stated, 'We are acting to bring bills down now and for the long term.
These layers of levies and charges include network costs, subsidies for renewable technologies, charges for smart meters, home-efficiency schemes, and levies to fund major infrastructure projects such as the Sizewell C and Hinkley nuclear power stations.
' Meanwhile, a report from the think tank Onward claims that subsidies paid to fund new wind farm sites, known as Contracts for Difference (CfDs), currently add £30 a year to household power bills and could rise to £70 by 2030. ' The specific events in the Middle East driving the potential £160 increase in bills from July have not been detailed, and the basis for Onward's forecast that wind farm subsidies could rise to £70 by 2030 remains unclear.
This has led to household bills increasing rather than benefiting from falling wholesale costs.