Ofgem announced on Wednesday 25 February 2026 that the energy price cap will fall by 7%, or £117, for the period covering 1 April to 30 June 20261. For an average household paying by Direct Debit for gas and electricity, the overall bill will be £1,641 per year, a reduction of around £10 a month1. The regulator said recent government budget interventions relating to policy costs are the main cause of the reduction, and that the new level is more than £200 lower than a year ago1.
The cap sets a maximum rate per unit and standing charge for customers not on a fixed-rate tariff1. Ofgem's summary of changes gives the levels by payment method2:
| Payment method | 1 Jan to 31 Mar 2026 | 1 Apr to 30 Jun 2026 | Change |
|---|---|---|---|
| Direct Debit | £1,758 | £1,641 | -£117 (-7%) |
| Standard Credit | £1,894 | £1,772 | -£122 (-6%) |
| Prepayment (PPM) | £1,711 | £1,597 | -£114 (-7%) |
| Economy 7 (Direct Debit) | £1,229 | £1,108 | -£121 (-10%) |
Ofgem said the policy cost allowance has fallen by £130 (55%), from £236 to £106 per year for a typical consumer, driven mainly by Budget 2025 measures: the Energy Company Obligation and Great British Insulation Scheme allowances no longer being funded from energy bills, and a 75% reduction in the Renewables Obligation allowance, both from 1 April 20262. Wholesale costs fell by £38 (6%), from £690 to £652, while network costs rose by £66 (17%), from £397 to £463, primarily due to the RIIO-3 price control settlements2. Ofgem also confirmed a decision to move Warm Home Discount costs from standing charges to the unit rate, following a government decision, so standing charges will drop by an average of £13, or 4p a day, for customers using both electricity and gas1.
Tim Jarvis, Director General, Markets, at Ofgem, said:
"The price cap protects households from overpaying for energy, but it's a safety net. Last year, consumers on fixed deals paid around £115 less than the cap on average, so we'd encourage people to speak to their supplier about the options available and consider whether a different tariff or payment method could help bring their bills down further."
Ofgem said customers could also save by changing payment methods from standard credit to Direct Debit or smart prepayment, and that 8 million customer accounts pay by standard credit but could be making savings of around £131 with one simple switch1. Its summary states standard credit customers pay an additional £131 compared with Direct Debit, and that the PPM cap level is £44 lower than the Direct Debit cap level2. Ofgem also confirmed a pilot for lower standing charge tariffs starting this spring, first offered to eligible customers of EDF, E.ON, Octopus and British Gas1.
EDF published its own account of the change, stating the cap will fall to £1,641 per year from 1 April 2026, and giving average Direct Debit unit rates and standing charges across England, Scotland and Wales including VAT: electricity at 24.67p per kWh and 57.21p per day, gas at 5.74p per kWh and 29.09p per day, against 27.69p per kWh and 54.75p per day for electricity and 5.93p per kWh and 35.09p per day for gas in the previous period3. EDF elsewhere gives the figure as £1,6403. Uswitch, writing before the announcement, had expected a fall of around 7% to about £1,6354.
Why it matters for households
The cap is a limit on unit rates and standing charges, not a cap on the total bill, so what a household pays depends on how much energy it uses1. Ofgem said the reduction will differ for each household depending on usage, and that higher users, particularly high electricity users, will see a greater reduction because of the 75% cut in Renewables Obligation costs, which affects electricity bills only1. The typical household figure is an average, not a promise.
Two elements pull in opposite directions. Unit rates fall, but network costs rose by £66 and standing charges are only partly offset by the £13 average reduction from the Warm Home Discount change1. For a low-usage home, the standing charge is a larger share of the bill, which is the reasoning behind the lower standing charge pilot1. Payment method also matters: standard credit remains the most expensive option under the cap2. The rates by payment method set out the differences.
On energy independence, Ofgem said wholesale gas costs still make up the largest part of the bill and that consumers remain exposed to the volatility that increased bills during the crisis, with investment in networks as part of a greener, homegrown energy system intended to reduce reliance on volatile international markets in the longer term1. Its summary records that Great Britain's wholesale gas prices remain highly influenced by global markets2.
What happens next
The new cap runs from 1 April to 30 June 20261. Ofgem announces new price caps about six weeks before they come into effect, and a new cap begins on 1 July, to be announced at the end of May4. The lower standing charge pilot starts this spring with eligible customers of EDF, E.ON, Octopus and British Gas1. The price cap history lists every level since 2019 and the announcement dates.
Sources5 cited
- Energy price cap will fall by 7% from April | Ofgem, ofgem.gov.uk
- Summary of changes to energy price cap 1 July to 30 September 2025, ofgem.gov.uk
- April 2026 energy price cap to fall by 7% | EDF, edfenergy.com
- February 2026 energy price cap to be announced this week - here’s what to expect - Uswitch, uswitch.com
- February 2026 energy price cap: how much is it likely to be? - Uswitch, uswitch.com