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Many of us are feeling the pinch thanks to steep household bills, but the good news is that for the average household, energy bills are set to reduce by around £150 a year from April 2026.
The £150 saving was announced in last year’s Budget, and is made possible due to the government reducing some of the extra charges that are currently added onto our bills.
Here, we explain why and how bills are coming down, and what other support might be available if you’re struggling to cover energy costs.
How is the government cutting energy bills by £150?
Instead of paying certain costs through your energy charges, the government is shifting some of these across to general taxation. That includes expenses from older subsidy schemes that used to be funded via bills. This means less being added into your energy spend each year.
The specific schemes involved are the Energy Company Obligation (ECO) and Renewables Obligation (RO). ECO funding will end from 31 March 2026. 75% of RO costs will now be funded from general taxation, with the savings from both taking effect from 1 April 2026.
Will everyone get the same £150 off bills?
No they won’t, as savings will vary depending on the type of property you live in and the amount of energy you use. It’s worth noting too that ‘average’ savings across all households aren’t the same as savings for a ‘typical’ household.
The average amount saved annually across all households is £154 a year, which the government has rounded down to £150. However, for a ‘typical’ dual-fuel medium household as defined by Ofgem, the impact is equivalent to £134 off the price cap.
This is because the typical household uses less electricity than an average across all households.
The table below shows how much different households are likely to save over a year.
| Type of household | Estimated electricity and gas usage per year | Bill cost saving £/year equivalent including VAT |
| Typical dual fuel household, 2‑3 bedroom house, 2‑3 people with typical Price Cap consumption levels |
2.7 MWh electricity, 11.5 MWh gas |
£134 |
| High-demand rural household with poor energy efficiency |
3 MWh electricity, 30 MWh gas |
£205 |
| Gas-heated house with medical equipment and constant heating |
4 MWh electricity, 25 MWh gas |
£224 |
| Low-demand flat or 1-bedroom house with 1‑2 people |
1.8 MWh electricity, 7.5 MWh gas |
£88 |
| High-use electric storage-heated household |
12.5 MWh electricity, no gas |
£442 |
Source: Gov.uk
Is this the same as the Warm Homes Discount?
No, the £150 saving from April is completely separate from the Warm Home Discount, so you might find you can benefit from both.
The Warm Home Discount scheme is an initiative where certain energy companies provide a one-off payment or “discount” of £150 to help people on low incomes to reduce the cost of their energy bills over the winter. The government has now extended the scheme until the winter of 2030/31. It was originally due to finish at the end of March 2026.
The scheme is available to households in England, Wales and Scotland, and many people on means-tested benefits will be automatically eligible (provided their supplier belongs to the scheme), regardless of the size or type of property they live in. You’ll need to meet the eligibility criteria of the relevant scheme, which will vary depending on where you live.
You can find out more about the Warm Homes Discount scheme in our guide What is the Warm Home Discount scheme?
Does the £150 government reduction affect the price cap?
Separately from the government’s changes, energy regulator Ofgem continues to set a price cap, which is a limit on how much suppliers can charge per unit of energy. That cap can go up or down based on wholesale prices, but the £150 average annual bill reduction taking effect from April 1, 2026, will also have an impact on the price cap as it is reflected in lower unit rates.
The £150 Warm Home Discount, however, doesn’t impact the energy price cap as it is a targeted rebate applied to individual accounts, not a general reduction in the unit rates of the price cap.
You can learn more about the energy price cap in our guide What is the energy price cap?
Can I get the money off my energy bills as a cash payment?
No you can’t as this isn’t a direct cash payout, rather the saving is reflected in how much households are charged for their energy over the course of a year.
You can find ways you might be able to reduce your energy bills in our articles Energy saving tips: how to reduce your bills and 11 practical tips to keep warm and save energy this winter.
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