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. Within the same announcement, the regulator confirmed a decision to move Warm Home Discount costs from standing charges to the unit rate, following a government decision1. As a result, standing charges will drop by an average of £13, or 4p a day, for customers using both electricity and gas1.
The change affects how the cost of the Warm Home Discount is recovered from bills. Ofgem said:
"We are also today confirming a decision to move Warm Home Discount costs from standing charges to the unit rate, following a government decision."
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. Ofgem 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. When adjusted for inflation, the new cap is 12.3%, or £231, lower than the same period in 20251.
The regulator also set out other elements of the cap. Network costs have increased by £66, or £6 a month, primarily due to price control changes associated with RIIO3 and investment needed to upgrade energy infrastructure1. Ofgem said wholesale prices, which continue to make up the largest portion of the bill, have fallen by 6% over the past three months but remain exposed to unpredictable global events1.
Ofgem has also confirmed that a pilot for lower standing charge tariffs will start from this spring, first offered to eligible customers of EDF, E.ON, Octopus and British Gas1. The regulator said the pilot is intended to bring greater choice for consumers, particularly those with low energy usage1.
| Item | Change |
|---|---|
| Price cap, 1 April to 30 June 2026 | Down 7%, or £1171 |
| Average dual fuel Direct Debit bill | £1,641 per year1 |
| Standing charges, dual fuel | Down an average of £13, or 4p a day1 |
| Network costs | Up £66, or £6 a month1 |
Why it matters for households
Standing charges are the fixed daily amount billed regardless of how much energy a home uses, and they are covered in the site's guide to standing charges on energy bills. Moving Warm Home Discount costs out of standing charges and into the unit rate shifts part of the cost of the scheme from a flat daily charge onto the price paid for each unit of energy used. For a household using both fuels, the average standing charge reduction is £13 a year, or 4p a day1. Because the same cost is recovered through the unit rate, the effect on an individual bill depends on usage, and Ofgem has not reported a household-by-household breakdown of the change.
The wider cap reduction is driven mainly by government budget interventions on policy costs, which Ofgem said apply to all customers but differ by household depending on usage1. Higher electricity users are expected to see a greater reduction, due to a 75% cut in Renewables Obligation costs that affects electricity bills only1. Ofgem also noted that 8 million customer accounts pay by standard credit and could save around £131 by switching to Direct Debit or smart prepayment1.
For a home's energy independence, the split between fixed daily charges and unit rates matters because it changes how much of a bill is unavoidable and how much responds to usage. The Ofgem guide sets out the regulator's remit, and the site's standing charge reform page covers zero standing charge tariffs, which the spring pilot will test with four suppliers1.
What happens next
The new cap level and the standing charge reduction take effect for the period 1 April to 30 June 20261. The pilot for lower standing charge tariffs is due to start from this spring, beginning with eligible customers of EDF, E.ON, Octopus and British Gas1. Ofgem has not reported further dates for the pilot's expansion.
Sources1 cited
- Energy price cap will fall by 7% from April | Ofgem, ofgem.gov.uk