Will gas and electricity bills fall in 2026? Energy price forecast

Person uses smart meter to look at their energy bills. — (Image credit: Olga Dobrovolska via Getty Images)

Energy bills for most households in England, Scotland and Wales are set to fall by 7% – equivalent to £117 a year – from 1 April when the latest energy price cap comes into play.

Millions of households will see some reduction in their costs following the energy bills saving announcement made by the government in the Autumn Budget.

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The drop means the average household on a dual-fuel tariff paying by direct debit will pay around £1,641 a year, down from £1,758 per year in the first quarter of 2026. The price cap, which affects around 33 million households, is based on unit prices, not your overall bills, so your actual bill will be determined by the amount of energy you use. It is not a cap on your total bill.

Tim Jarvis, director general of Markets at Ofgem, said: “[This] announcement will be welcome news for many households. Wholesale energy prices have fallen in recent months, and we’re investing in our network to safeguard the future energy system.”

Why are energy bills set to come down?

Energy bills are falling from 1 April following measures announced by the government in its 2025 Autumn Budget.

A major eco scheme is being ditched in April while the vast majority of costs associated with another government scheme will be shifted into general taxation.

The government said this would see energy bills drop by £150 per year, however Ofgem said this fall has been partially offset by an increase in the cost of running the network, which is increasing by £66 a year.

Prime minister Sir Keir Starmer said: “Energy bills [are] coming down by £117. For millions of families and young people struggling, that's guaranteed money off bills in April, driven by the action that this Labour government has taken.

“We promised to cut the cost of living, we are cutting the cost of living.”

While the latest drop brings some good news for households, it is only a small saving, with the average energy bill still north of £1,500 per year and high compared to historic levels.

What are the new energy unit prices?

Energy bills will fall by 7% from 1 April. It means the average household on a dual-fuel tariff (which covers gas and electricity) will pay £1,641 a year during Q2, down from £1,758 a year currently.

The current price cap energy unit prices and those for April to June 2026 can be found below:

Swipe to scroll horizontally

Current energy price cap per unit and standing charge

1 January to 31 March 2026

New energy price cap per unit and standing charge from 1 April to 30 June

Electricity

27.69 pence per kWh

54.75 pence daily standing charge

24.67 pence per kWh

57.21 pence daily standing charge

Gas

5.93 pence per kWh

35.09 pence daily standing charge

5.74 pence per kWh

29.09 pence daily standing charge

Source: Ofgem

How has the government helped with energy bills from April?

The fall from 1 April comes following government intervention in the Autumn Budget, when the chancellor Rachel Reeves confirmed 75% of the costs of the Renewables Obligation, which places an obligation on suppliers to buy renewable energy, will be moved into general taxation.

Reeves also said the Energy Company Obligation (ECO) scheme, which requires suppliers to provide low-income households with energy-saving measures in their homes, will not be extended past March 2026.

How much you will save depends on whether your supplier helps fund the two government schemes, but the savings will apply to all tariff types, including: variable tariffs, fixed tariffs, tracker tariffs and time-of-use tariffs.

Almost all energy providers fund both schemes so the majority of households in Britain will benefit from the bill drop in April.

Consulting firm Cornwall Insight said the price cap would have risen in April by as much as £57 had the government not intervened.

Where will energy prices go in 2026?

The next Ofgem price cap, covering the July to September period, will be confirmed by 27 May.

Consultants at Cornwall Insight, which is well-regarded for the accuracy of its price cap predictions, predict the July price cap will rise slightly to £1,645 from £1,641 in April.

Craig Lowrey, principal consultant at Cornwall Insight, said the large drop in energy bills in April would likely be a one-off.

“Ongoing geopolitical tensions and the potential impact on key global gas supply routes underline the risks and variables at play, and July’s cap could go either way,” Lowrey added.

Lowrey said transitioning the UK away from relying on gas imports from abroad and towards producing more domestic renewable energy could offer a long-term solution to this issue.

EDF Energy expects the price cap will fall by £6 on 1 July from £1,641 to £1,635.

The energy firm is then forecasting the cap to rise by £4 from 1 October to £1,639 and then jump by £20 to £1,659 from 1 January 2027.

British Gas also publishes price cap forecasts. The energy company thinks the cap will drop a fraction on 1 July from £1,641 to £1,640.

It thinks bills will then fall £5 from 1 October to £1,635 and then rise by £10 from 1 January 2027 to £1,645.

You should take these predictions with a pinch of salt, however, as it is very difficult to accurately forecast where energy prices will go so far in the future, particularly because the wholesale energy market can be so volatile.

Energy bills are expected to stay relatively high over the next five years to fund a £28 billion investment in the energy network.

Energy firms were given the green light to upgrade power and gas grids in December 2025, but households will have to pay for it through their bills.

Ofgem said household electricity and gas bills will rise by a net of £30 per year by 2031. This factors in any savings that will be made by consumers due to the upgrades.

The regulator said it would hold firms to account for delivering upgrades on time and on budget.

How to keep energy bills low

To help you keep energy bills low, we have gathered some top tips in our article looking at 14 ways to reduce your energy costs.

If you're interested in the best ways to improve your energy efficiency and reduce costs, we explore radiators versus electric heaters, heated airers versus tumble dryers, and wood burning stoves versus central heating in separate articles.

How to get help with paying your energy bills

If you’re struggling to afford your energy bills, your energy supplier may offer support with hardship grants. Octopus Energy has Octo Assist and British Gas has the British Gas Energy Trust.

You may be able to get a repayment holiday. This is where you ask your supplier to pause your repayments for a short amount of time to give you some breathing space.

Another option is to agree to an affordable payment plan. You will pay fixed amounts over a set period of time, which will cover what you owe plus an amount for your current use.

If you are on benefits, you might be able to repay your debt directly from your benefits through the Fuel Direct Scheme.

According to Citizens Advice, the Fuel Direct Scheme can be a good option if you can’t agree on a plan to pay back your debt, and it’s usually better than getting a prepayment meter.

Additionally, some government schemes give some households money towards paying their energy bills.

The Warm Home Discount is offered to households in receipt of some means-tested benefits who use participating energy suppliers and provides £150 of credit that is automatically paid towards your energy bill.

Meanwhile, if you are a pensioner with an income of £35,000 or less, you will be eligible for the Winter Fuel Payment, which provides retirees with up to £300 each winter.

What’s happening with standing charges?

From 1 April, standing charges, what you pay to cover the cost of maintaining the energy network, will fall for households.

The Warm Home Discount scheme is currently funded by consumers through their gas and electricity standing charges, but these will now be moved to unit rates instead.

This means if you use more energy, theoretically this change could impact you more, although the government has said for a typical dual-fuel household there will be no obvious change in energy bills.

Sam has a background in personal finance writing, having spent more than three years working on the money desk at The Sun.

He has a particular interest and experience covering the housing market, savings and policy.

Sam believes in making personal finance subjects accessible to all, so people can make better decisions with their money.

He studied Hispanic Studies at the University of Nottingham, graduating in 2015.

Outside of work, Sam enjoys reading, cooking, travelling and taking part in the occasional park run!

With contributions from

Daniel HiltonWriter