Why are my energy bills falling when we’re in the middle of another energy crisis?

At first glance, the latest fall in energy bills looks puzzling.

Global energy markets remain fragile, conflict in the Middle East has intensified, and wholesale gas prices are once again volatile. Yet from 1 April 2026, the typical UK household saw its energy costs fall, with the Ofgem price cap dropping to £1,641 a year.

So what’s going on?

The answer is that the recent fall in bills is not primarily the result of calmer energy markets. Instead, it reflects a government intervention that temporarily reduced the amount households pay for certain policy costs on their energy bills.

The key reason energy bills fell on 1 April

In the Autumn Budget, the government announced changes to how two long-standing environmental schemes are funded:

• The Energy Company Obligation (ECO) - which funded home energy efficiency improvements - was scrapped entirely from household energy bills
• 75% of the Renewables Obligation (RO) - which supports renewable electricity generation was moved off bills and into general taxation

From 1 April 2026, these changes fed directly into the Ofgem price cap calculation, reducing the costs suppliers are allowed to recover from customers through unit rates and standing charges.

These policy changes are the single biggest reason energy bills fell this spring, not an improvement in the underlying cost of energy.

Why everyone felt the benefit. Even Fixed tariff customers

Crucially, this reduction was not limited to customers on standard variable tariffs.

The government confirmed that suppliers were expected to pass on the same savings to customers on:

• Fixed tariffs
• Tracker tariffs
• Prepayment and time of use tariffs

As a result, millions of households saw their unit rates adjusted downward from April, regardless of whether they were already locked into a fixed deal or not. 

This is why April’s price fall felt unusually broad, and why it can seem counterintuitive given what’s happening globally.

Why the April energy bill reduction is temporary

The key thing for households to understand is that this effect is temporary.

Moving Renewables Obligation costs into general taxation and ending ECO funding were one-off policy decisions. It lowered bills in April, but it does not protect consumers against future rises driven by wholesale prices, network costs or geopolitical shocks.

In fact, once this intervention is stripped out, many of the underlying pressures on energy prices remain, which is why most forecasts currently point to higher bills from July onwards.

And that’s where customer choices start to matter again.

What UK households need to know about energy prices right now, and the choices available to them

After several turbulent years, UK households have finally seen some welcome relief on energy bills.

From 1 April to 30 June, the Ofgem energy price cap has fallen to £1,641 per year for a typical dual-fuel household paying by Direct Debit, a drop of around 7% compared with the previous quarter. For many families, that has provided some much-needed breathing space.

But this period of stability may not last.

Industry forecasts currently suggest energy prices could rise sharply again from 1 July, with a further increase possible from 1 October. While forecasts are never certain, the risk of higher bills later this year is real, particularly for customers on standard variable and tracker tariffs.

So what’s happening in the market, and what options do households have as we head toward another potentially volatile period? Our price cap predictions are updated weekly, so you can see how it affects your energy tariff choices should you want to switch supplier or tariff.

Why are energy prices expected to rise again?

Most market forecasts now point to a meaningful increase in the price cap from 1 July 2026, with a further rise possible from October if current conditions persist.

Indicative projections suggest the cap could rise toward:

• Approx £1,850+ per year from July
• Approx £1,900+ per year from October

These figures are not guaranteed and could change before Ofgem announces the official cap levels. They are driven by:

• Renewed volatility in wholesale gas markets, linked to global events
• Rising network costs as the UK invests in energy infrastructure
• The fact that part of the recent price fall was supported by one-off policy interventions rather than lasting reductions in underlying costs

The next key date is 26 May, when Ofgem will confirm the price cap level for July-September 26.

Standard Variable tariffs: Flexible, but fully exposed

Around six in ten households remain on a price-capped standard variable tariff.

The advantage is flexibility: customers benefit automatically if prices fall again. The downside is risk: when the price cap rises, bills rise automatically too.

If forecast increases materialise, customers who remain on standard variable tariffs could see their monthly costs rise significantly from the summer, with little warning and limited ability to budget ahead.

That doesn’t mean staying variable is wrong. But it does mean doing nothing is an active choice, with potential for consequences if prices shift up.

Fixed energy deals: Not cheap today, but potentially valuable tomorrow

At first glance, fixed tariffs may not look compelling right now.

Compared to the current £1,641 price cap, many fixed deals show little or no immediate saving, and some may even appear slightly more expensive. But that comparison only holds if prices stay where they are.

The real value of fixing lies in what happens next.

If the July price cap is confirmed at a much higher level on 26 May, today’s fixed deals could quickly look very good value, not because they’ve changed, but because the market has moved around them.

Choosing a fixed deal now is less about beating today’s prices, and more about:

• Protecting against known near-term risks
• Locking in certainty through a volatile period
• Avoiding sudden bill increases later in the year

For many households, predictable monthly costs have a value of their own, even if the fixed rate isn’t the absolute cheapest option today.

Tracker energy tariffs: Strong short-term value, with longer-term risk

Tracker tariffs are often misunderstood, but they play an important role in the market.

Most tracker tariffs available today offer a guaranteed discount against the Ofgem price cap, either through lower unit rates or reduced standing charges. As a result, customers can be confident they’ll pay less than someone on a standard variable tariff while the tracker applies.

That makes trackers look particularly attractive right now, when the price cap is relatively low.

Why tracker tariffs work well right now

• They directly benefit from the current low price cap
• They typically undercut standard variable tariffs
• They appeal to those who don’t want to fix yet, but still want a saving

The critical limitation

Tracker tariffs rise when the price cap rises.

If the cap jumps in July, tracker prices jump too; the discount remains, but it’s applied to a higher base. Over time, this means:

• Trackers could become more expensive month to month
• You could end up paying more than they would have on a fixed deal taken earlier
• Savings versus standard variable tariffs may shrink as overall prices rise

In a rising market, trackers keep you “close to the action” rather than taking you out of it.

Comparing energy tariff options: different choices for different risks

Each tariff type protects against a different risk:

• Standard variable rate energy tariffs offer flexibility, but full exposure to price rises
• Tracker energy tariffs guarantee a discount to the price cap, but still rise when the cap rises
• Fixed energy tariffs remove exposure to the cap altogether, but don’t benefit if prices fall

There is no universally “right” answer, only better-informed choices based on appetite for risk, need for certainty, and household circumstances.

One thing is clear: Timing matters

With the next price cap decision due on 26 May, households are approaching a fork in the road.

Those who wait may benefit if prices surprise on the downside. But if forecasts prove broadly accurate, customers who acted earlier, particularly those who fixed, may find themselves better protected through the rest of 2026 and beyond.

In volatile markets, the cheapest option today is not always the cheapest option over time.

Understanding the trade-offs now gives households the best chance to stay in control of their energy costs, whatever the market does next.

An option for peace of mind: Fixing for the next two years

For households looking to reduce uncertainty, fixing can be a reassuring option.

Right now, EDF is offering a 2-year fixed tariff priced just above the current Q2 price cap. While it may not be the very cheapest option today, it offers something many households value highly after years of volatility: predictability.

By fixing for two years, you could:

• Lock in a known unit rate through the rest of 2026 and 2027 and into 2028
• Avoid exposure to forecast price cap rises from July and October
• Budget with confidence, knowing monthly energy costs won’t change with market shocks

For households who prioritise stability over trying to time the market, a longer-term fixed deal offers a simple way to step off the energy price rollercoaster and focus on everyday life, not energy headlines.

Check out your options and see what's right for you

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Written by Jon Perks - Sales and Marketing Director
Jon Perks is a Sales and Marketing Director with extensive experience guiding customers through periods of energy market volatility. Drawing on deep commercial insight and first‑hand experience of market disruption, Jon provides clear, practical analysis to help customers understand what’s driving change in the energy market and make informed, confident decisions.