Energy bill reductions: statement to energy suppliers
Published 17 December 2025
Applies to England, Scotland and Wales
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As outlined in the Autumn Budget 2025, the government is implementing targeted measures to reduce energy costs and support households throughout Great Britain. The government will work with the Northern Ireland Executive if they choose to develop a comparable offer.
Effective from 1 April next year, the average household will benefit from a £150 reduction in the costs on their energy bill. This is in addition to £150 off bills from the Warm Home Discount (WHD) which will benefit 6 million households. This initiative forms part of an ongoing commitment to lower the cost of living for working people. From April 2026/27–28/29, 75% of domestic costs associated with the Renewables Obligation (RO) will be met by the Exchequer. From April 2026, the Energy Company Obligation (ECO) will no longer be levied on energy bills.
These measures are intended to deliver relief to households, promote long-term affordability, and ensure the energy sector remains fit for future demands. The government is working with suppliers, Ofgem, and other relevant stakeholders to facilitate a smooth implementation of the measures.
For the RO, the established process for annual announcements will continue, with the Secretary of State publishing the RO obligation level and Ofgem confirming both the buy-out price and the default tariff cap as standard.
The government anticipates that, under normal business conditions, suppliers will continue to offer competitive tariffs to consumers and are encouraged to continue providing the most cost-effective options available.
While certain measures announced in the budget may influence pricing until April, it is expected that the current costs of the RO and ECO will be reflected in current consumer bills until 1 April 2026, the point at which the RO measure comes into effect and the ECO scheme ends. Government expects the savings to be passed on in full to all customers from 1 April 2026 onwards, including those on existing fixed tariffs entered into ahead of 1 April 2026.
Further details and guidance will be communicated to suppliers on how we expect savings to be passed on to those on existing fixed tariffs in due course.