Energy bills: What is happening to gas and electricity prices?
BBC World
February 25, 2026
AI-Generated Deep Dive Summary
Energy bills are set to fall for typical households in the UK following changes to how charges are calculated. Starting on 1 April 2026, the new energy price cap will reduce annual household bills by around £117, or 7%, compared to previous levels. This decrease comes after a government commitment to remove certain costs from energy bills, though it’s important to note that prices remain significantly higher than pre-Ukraine war levels.
The energy cap sets maximum charges for gas and electricity on standard variable tariffs. While the unit price reduction will save households money, ongoing increases in infrastructure maintenance fees—such as upgrading power lines and reducing dependence on gas—will add £6 a month to typical bills by 2031. This adjustment means that while initial estimates suggested savings of £150, actual savings under the new cap will be around £117 annually.
Key changes include the removal of charges related to insulation schemes and shifting funding for renewable energy projects from bills to general taxation. Additionally, prepayment meter users now pay the same rate as direct debit customers, aligning their costs for the first time. This shift aims to make energy more affordable and equitable for all households, though actual savings will vary based on usage patterns, property type, and payment methods.
The changes reflect broader efforts to stabilize energy prices and reduce reliance on volatile gas markets. While the cap provides immediate savings, increased infrastructure costs will gradually offset some of these benefits over time. Understanding how the cap works, including submitting meter readings during price changes, is crucial for avoiding potential overcharges. These adjustments highlight the government’s balancing act between supporting affordability and investing in long-term energy stability.
For readers interested in global economics and policy, this reflects the UK’s response to high energy costs and its strategy to transition to cleaner energy while ensuring affordable access. The measures aim to provide short-term relief while laying the groundwork for a more resilient energy system.
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Originally published on BBC World on 2/25/2026