Energy Bills Fall by £117 This Quarter, But July Brings Forecast Rises

Good news for your household budget this quarter: Ofgem has confirmed the energy price cap for April to June 2026 will fall to £1,641 per year for a typical household paying by Direct Debit. This means a welcome reduction of 7%, or £117 annually, compared to the cap in place from January to March 2026.

This is the first significant drop we’ve seen in a while, offering some breathing room for millions of UK households grappling with the cost of living. The new cap came into effect on 1st April 2026.

What Changed and By How Much?

The energy price cap is a limit on the maximum amount suppliers can charge you for each unit of gas and electricity you use, and the standing charge. For the three months from April to June 2026, Ofgem has set this cap at £1,641 for a typical annual bill. This is down from the previous cap, meaning an average saving of £117 over the year.

For context, if your annual bill under the previous cap was around £1,758, you could now expect it to be £1,641, assuming your usage remains the same. This reduction applies to variable tariffs, which most households are on.

What this means for you

For a typical household, this £117 annual saving translates to roughly £9.75 less per month on your energy bill. While it might not feel like a huge sum, every pound counts when managing household finances. If you pay by Direct Debit, your payments should automatically adjust downwards to reflect the new, lower cap. It’s always worth checking your statements to ensure this change has been applied correctly by your supplier.

But there are risks: July Forecasts Point to a Rise

While the current fall is positive, the outlook for the second half of 2026 is less optimistic. Energy analysts at Cornwall Insight are forecasting that the energy price cap could rise significantly in July 2026. Predictions suggest an increase of between 11% and 13%.

This potential rise is attributed to several factors, including ongoing geopolitical tensions, with some reports linking it to the Iran War. If these forecasts hold true, any savings made in the April-June quarter could be quickly eroded, pushing typical annual bills back up.

Should You Switch to a Fixed Energy Tariff?

With the price cap set to fall then potentially rise again, many people are asking if it’s time to consider a fixed energy tariff. Fixed tariffs lock in your unit rates for a set period, usually 12 or 24 months, protecting you from future price cap increases.

However, fixed tariffs often come at a premium compared to the current price cap. MoneyWeek advises that while the current cap has fallen, the future forecast rise might make some fixed deals look more attractive later in the year. It may be worth comparing offers from different suppliers against the predicted July cap before making a decision. Remember, there's no guarantee that a fixed deal will always be cheaper than the variable cap over its entire term, especially if wholesale prices fall unexpectedly.

Step-by-Step: What to Do Right Now

1. Check Your Direct Debit: Ensure your energy supplier has adjusted your monthly payments to reflect the new, lower price cap from April 2026.
2. Monitor Your Usage: Keep an eye on your energy consumption. Even with lower unit rates, reducing usage is the most effective way to save money.
3. Review Your Tariff: While the cap is currently lower, start looking at fixed deals again as we approach July. Compare them against the current cap and the forecasted July increase.
4. Consider Energy-Saving Measures: Simple changes like turning off lights, unplugging unused devices, and ensuring your home is well-insulated can make a big difference to your overall bill.

Where to Get Help

If you're struggling to pay your energy bills, don't suffer in silence. Organisations like Citizens Advice offer free, impartial advice on managing debt and understanding your energy options. Many energy suppliers also have hardship funds and support schemes available for customers in need.