Energy Prices confusion

IOWJJBTM2025

Have been looking at Cornwall Insight this morning.
Good news - Price cap for typical user is forecast to reduce from £1758 per year to £1620 per year in April 2026.
This is a saving of £138 or 8%. for the typical user ( Gas 11500 kWh / Electric 2700 kWh per year)
Cornwall Insight state "The main drivers behind this expected reduction are recent policy decisions announced in the Budget."

The day before the budget was announced it was previously predicted to be 6% reduction due to falling wholesale costs.

So am I correct? In the budget we were told that we would get £150 off our energy bills.

 Before the Budget we already estimated estimated £105 reduction due to falling wholesale costs.

When the budget was announced my assumption was that energy costs would reduce by £150 plus £105 = £255 in April 2026.

Now we are forecasted to get £138.

MattMattMattUK

IOWJJBTM2025 said:

Have been looking at Cornwall Insight this morning.
Good news - Price cap for typical user is forecast to reduce from £1758 per year to £1620 per year in April 2026.
This is a saving of £138 or 8%. for the typical user ( Gas 11500 kWh / Electric 2700 kWh per year)
Cornwall Insight state "The main drivers behind this expected reduction are recent policy decisions announced in the Budget."

The day before the budget was announced it was previously predicted to be 6% reduction due to falling wholesale costs.

So am I correct? In the budget we were told that we would get £150 off our energy bills.

 Before the Budget we already estimated estimated £105 reduction due to falling wholesale costs.

When the budget was announced my assumption was that energy costs would reduce by £150 plus £105 = £255 in April 2026.

Now we are forecasted to get £138.

The budget reduction removed around £150 of policy costs for the typical user, but the actual cost set will be based on the reference period. So without the budget the cost for a typical user would be £150pa higher, but it can still vary based on the underlying cost of energy.

matelodave

this is what the government reckon will happen. The £150 is an average for an average dual fuel customer. 

https://www.gov.uk/government/news/what-does-the-autumn-budget-mean-for-your-energy-bills

Also bear in mind that the money is now coming out of taxation so if you work and pay taxes you'll probably be no better off.

Check your energy bill in April and then see how much your take home pay has dropped and how much other stuff has increased (council tax etc) to see if you really are better off or whether its just smoke and mirrors as usual.

Scot_39

matelodave said:

this is what the government reckon will happen. The £150 is an average for an average dual fuel customer. 

https://www.gov.uk/government/news/what-does-the-autumn-budget-mean-for-your-energy-bills

Also bear in mind that the money is now coming out of taxation so if you work and pay taxes you'll probably be no better off.

Check your energy bill in April and then see how much your take home pay has dropped and how much other stuff has increased (council tax etc) to see if you really are better off or whether its just smoke and mirrors as usual.

The bulk of the private taxation measures in the budget are deliberately back loaded - happening as much as 3 years after the cut.  The average PAYE employee likely to see no change in take home.

Dividend tax rates might affect serious investors (outside of pensions and isa wrappers) - and of course self employed / directors etc. 

But whether its your taxes now or future, business taxes or debt / debt interest - most will pay in the end.

As you say - smoke and mirrors - just in time for May elections.

Scot_39

IOWJJBTM2025 said:

Have been looking at Cornwall Insight this morning.
Good news - Price cap for typical user is forecast to reduce from £1758 per year to £1620 per year in April 2026.
This is a saving of £138 or 8%. for the typical user ( Gas 11500 kWh / Electric 2700 kWh per year)
Cornwall Insight state "The main drivers behind this expected reduction are recent policy decisions announced in the Budget."

The day before the budget was announced it was previously predicted to be 6% reduction due to falling wholesale costs.

So am I correct? In the budget we were told that we would get £150 off our energy bills.

 Before the Budget we already estimated estimated £105 reduction due to falling wholesale costs.

When the budget was announced my assumption was that energy costs would reduce by £150 plus £105 = £255 in April 2026.

Now we are forecasted to get £138.

Apr used to be the traditional time of the year for major indexing (like inflation) and corrections to be applied.

Wholesale costs are not the only thing driving our bills.

Network costs and other policy costs - like the recent WHD extension - and of course debt allowances (with talk of a further 10% plus increase to the £50 currently built into the DF cap) are.

And we are now seeing things like the network curtailment and balancing costs kicking in faster - and so being tweaked ever upwards more regularly - such as in Oct cap for electricity costs.

Some announced in the Jan cap just applied - like the extra £7 for WHD recalc, like the £14 for nRAB - also likely missing from your sums.

So there will be other cost increases offseting the nominal £150 shift to general taxation - and possibly derailing the original CI £105 - not just any shifts in wholesale rates

IOWJJBTM2025

If I look at it today the Price Cap cost for typical user is £1758 per year. due to fall to £1620 in Apr'26.
The cheapest 12 month fix today for typical user is OutFox Energy @ £1494 per year. (15% below Price Cap)
My understanding is that fixes will be applicable to the government discount in Apr'26 and will be reduced according to MSE - for typical user this would be by reducing the rates as follows -
Electric 2700 units @ 3.54p / Gas 11500 units @ 0.35p = £136. (From MSE info)
Understand that fixes are still unsure exactly how the saving is to be passed back and we will be notified accordingly. Am also assuming that fixes offered today have not yet incorporated the government saving into the rate.

What I was trying to say previously is that before the budget there was already an expectation that energy costs would reduce by 6% mainly due to wholesale costs reducing. MSE states that 39% of the energy cost is made from wholesale cost. It seems the savings for wholesale reductions have now disappeared or have been swallowed up by the budget reduction if we take the information from Corwall insight to be true.

Home Energy current rate works out at £1475 per year for typical user (16% below Price Cap) and it will be very interesting to see what their new rates will be in Apr'26. Will it just be the government reduction of £136 or will they be more generous because of the wholesale cost reduction.

MattMattMattUK

IOWJJBTM2025 said:

If I look at it today the Price Cap cost for typical user is £1758 per year. due to fall to £1620 in Apr'26.
The cheapest 12 month fix today for typical user is OutFox Energy @ £1494 per year. (15% below Price Cap)
My understanding is that fixes will be applicable to the government discount in Apr'26 and will be reduced according to MSE - for typical user this would be by reducing the rates as follows -
Electric 2700 units @ 3.54p / Gas 11500 units @ 0.35p = £136. (From MSE info)
Understand that fixes are still unsure exactly how the saving is to be passed back and we will be notified accordingly. Am also assuming that fixes offered today have not yet incorporated the government saving into the rate.

What I was trying to say previously is that before the budget there was already an expectation that energy costs would reduce by 6% mainly due to wholesale costs reducing. MSE states that 39% of the energy cost is made from wholesale cost. It seems the savings for wholesale reductions have now disappeared or have been swallowed up by the budget reduction if we take the information from Corwall insight to be true.

Home Energy current rate works out at £1475 per year for typical user (16% below Price Cap) and it will be very interesting to see what their new rates will be in Apr'26. Will it just be the government reduction of £136 or will they be more generous because of the wholesale cost reduction.

Fixes are not SVT/price cap.

tlcgrantham

Isn’t the tariff the OP refers to for Home Energy a variable tariff? 

QrizB

tlcgrantham said:

Isn’t the tariff the OP refers to for Home Energy a variable tariff? 

It's all a bit muddled.

OP starts off talking about the CI forecast for the cap, then an OFTM fix, and then the Home Energy variable tariff.

It's not wonder that they're confused and the replies struggle to grip the question!

IOWJJBTM2025

To get back to the original subject of confusion.

My point is that the budget announced a saving commencing April next year and the forecasts are already building it into the price cap predictions when in my view it is a saving that everyone on fixes or variable tariffs will benefit from.

If I was to sign up for a fix today the budget saving of £136 would not be built into the rate.
However if the budget saving is built into the Price Cap it could it impact the future variable rates and possibly future fix rates post April'26.

We have forecasts from Cornwall Insight and EDF available to review. EDF forecast is where MSE gets its data from.
We are also aware that the budget should reduce by £136 for the typical user, spread over the 12 months after April'26.
I have a suspicion that the energy costs are already slowly increasing to swallow up the budget saving.
CI forecast is suggesting Price Cap will reduce by £138 in April.
EDF forecast has been updated to reduce only by £105 in April stating increase in wholesale costs.
The EDF forecast keeps moving by £5 per week. See EDF Forecast extract below which I have added the comments in red.

Scot_39

Again it includes 1 set of govt savings and likely a whole raft of other govt (via Ofgem) new costs and allowances / escalations.

Inflation being one obvious one, the new debt relief scheme another if approved - all eating into the £150 figure.

Which should never have been presented as it has been - as people are now falsely expecting a clean £150 drop.

I guess 3.5p and 0.35p of a kWh off of electric / gas - or even just the £150 itself - "but less expensive than it would have been" - just isnt as sexy a headline grabber - and the £ fits in with the currently overly heavy use of the cap - and often only ever the duel fuel cap.

Just the recent BBC estimate for gas and electric network costs going up by £30 and the DRS - iirc £3 upto £5 in Nov consultation for initial phase - more than covers the above differences (£136 vs £105) - I suspect with some more inflation indexing - we will be lucky to see even EDF £105 type level - unless gas drops more.

(Given UKs demand for gas actually increased c6% last year - it might not do so as much as elsewhere)

Its typically poor political expectation management - even for those that are fooled by the shift to general taxation (or dont care because are so poor - like on tax free benefits only - they do not pay as much tax) - many when see the lower reality - will be confused, disappointed, some even angry - when they personally dont see exactly £150 fall in April.