Energy bills to be cut as government removes policy costs from electricity bills

The government removed some scheme costs from household electricity bills on 1 April 2026, lowering the amount consumers pay for their energy¹. The change is separate from the energy price cap, which Ofgem reviews every three months, in January, April, July and October¹. Suppliers apply the lower prices automatically and customers do not need to do anything¹.

The cut applies to both variable and fixed tariffs. Which? reports that households already on a fixed deal have also seen their rates cut from 1 April because of the removal of government scheme costs². Citizens Advice states that suppliers should tell customers what their unit rate and standing charge will be from that date¹.

A tariff combines the rate paid for each unit of gas or electricity with a daily standing charge, which is payable regardless of usage¹. On a standard variable tariff, also called a default tariff, rates move with the price cap and suppliers must give a month's notice of changes². Standard tariffs carry no exit fees, so customers can leave at any time². Fixed tariffs set the unit rates and standing charge for the contract length, usually 12 or 24 months, but do not fix the total bill, which depends on usage². Exit fees on fixed deals can reach £75 per fuel on a 12-month contract, though switching is free in the 42 to 49 days before a tariff ends². Citizens Advice puts the free-switching window at 49 days or fewer remaining¹.

Other tariff types are unaffected in the same way. Capped tracker tariffs adjust every three months in line with the price cap, with unit prices always below it, while dynamic trackers can change daily or half-hourly². The Ofgem price cap does not apply to tracker tariffs, and some carry a higher supplier-set cap or none at all¹. Prepayment price-capped tariffs are slightly cheaper than direct debit tariffs on the price cap, and one supplier currently sells fixed deals for prepayment customers². Time-of-use tariffs charge different rates at peak and off-peak times and usually require a smart meter¹.

Why it matters for households

The reduction applies to electricity bills from 1 April 2026 and is applied automatically by suppliers, so no action is needed to receive it¹. Because the change is not part of the price cap, it affects bills independently of the cap's quarterly reviews¹. Households on fixed tariffs benefit even though their rates were otherwise locked in². The amount saved varies with usage, since unit rates and standing charges, not total bills, are what have changed². Standing charges vary by postcode and network operator¹. For households on tracker or dynamic time-of-use tariffs, the Ofgem price cap does not apply, so the effect of the change depends on the terms of the individual tariff¹.

What happens next

The price cap continues to be reviewed every three months, in January, April, July and October¹. Suppliers must give a month's notice of any change to variable tariff rates². The government has not reported any further removal of scheme costs beyond the 1 April change¹.

Consumers looking at how the change affects their bills can read our guide to cutting household bills, and more on how energy and other markets are regulated is in our regulation-policy section.