ALMOST seven million families will see £200 wiped off bills in a massive April price plunge – but experts have warned of a “cliff edge” trap.
Ofgem will announce the next energy price cap on Wednesday, February 25, with Cornwall Insights predicting bills could fall by £117 a year in April for millions of households.
The price cap limits the amount that suppliers can charge per unit of gas and electricity for homes on standard variable tariffs, and covers around 19million households.
This drop has been driven by the Government’s energy bill discount, which will deploy £6.9billion of public spending over the next three years to cut one of families’ biggest bills.
Analysis from the think tank Resolution Foundation, finds this policy will deliver a boost to living standards from April, and should help to keep bills below current levels until at least 2029 – when the relief comes to an end.
The research found the discount for a typical household will be worth around £135 in 2026-27, with up to 6.8 million homes saving more than £200.
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Based on market expectations of the price cap for the rest of 2026, the typical annual energy bill is now expected to be around £1,645 in 2026, more than £200 lower than it was in 2024.
However, the Foundation warned that “future pressure from policy and network costs” will pull up on bills between this April and April 2029.
As a result, it said the government’s discount will be “eroded over the course of the next three years, leaving bills around £60 lower than today’s levels by March 2029”.
The Foundation added that following this gradual up-tick in bills, an additional “cliff edge looms”.
It cautioned that once support is withdrawn in April 2029, potentially just ahead of a general election, bills would rise a further £55.
Jonathan Marshal, principal economist at the Resolution Foundation, said that government’s policy is “well designed,” but raised concerns.
He added: “However, this support is due to end in April 2029. The Government should set out a clear and durable framework for deciding which energy policy costs are funded by bills and which through taxation soon, to avoid scrambling for a solution in an election year.”
A DESNZ spokesperson said: “Tackling the energy affordability crisis is our number one priority – and this is just the start.
“We are getting off the rollercoaster of volatile fossil fuels and onto clean homegrown power which we control, to bring down bills for good.”
How to save on your energy bill
You could save hundreds of pounds a year on your energy bill by locking into a fixed-price energy deal.
These tariffs lock the price per unit of gas and electricity for a set period of time, for example one or two years.
By taking out one of these deals you are protected from price rises, which can give you certainty about how much you will pay.
To find the best fixed energy deals, use a price comparison website, such as Uswitch.com or Compare the Market.
Just enter your postcode and current usage deals to receive a list of deals that are available to you.
You can then compare the rates, contract lengths and additional features and benefits of the deals.
You should also go directly to the suppliers’ websites as they sometimes offer special promotions or discounts to customers.
Another cheap way you can cut bills is by blocking any draughts from doors and windows around your home, using draught excluders.
This could save you up to £50 a year, according to the Energy Saving Trust.
Turn down your thermostat by just one degree. This could save you £90 a year on your heating bill, the Energy Saving Trust says.
For most people, the most comfortable temperature to heat your home at is between 18 and 21 degrees.
Check if you’re owed energy bill help from the government or your supplier.
Several energy firms have schemes available to customers struggling to cover their bills.