From 1 April 2026, the average UK household's energy bill fell by approximately £150 a year following the Autumn Budget 2025. The reduction comes from two specific policy changes: the ending of the Energy Company Obligation (ECO) scheme from 31 March 2026, and the government taking on 75% of the Renewables Obligation (RO) cost through general taxation rather than consumer bills.
This is in addition to the Warm Home Discount of £150, which will benefit around 6 million lower-income households in 2026/27.
Where the £150 saving comes from
| Policy change | Saving per typical household |
|---|---|
| ECO scheme ending | £59 |
| 75% of Renewables Obligation moved to general taxation | £88 |
| VAT knock-on | £7 |
| Total average saving | £154 (rounded to £150) |
The cost to the Treasury of taking on 75% of the Renewables Obligation is £2.3 billion per year.
How the saving appears on your bill
The reduction shows up as lower unit rates, primarily on electricity:
- Electricity: down 3.37p/kWh (3.54p including VAT) — roughly 13% off the January 2026 price cap unit rate.
- Gas: down 0.31p/kWh (0.35p including VAT) — roughly 6% off.
Because the savings come through unit rates rather than standing charges, higher-use households save more in absolute terms than low-use households.
Will everyone actually save £150?
In short, no. The £150 figure is the average saving based on typical consumption. Actual savings depend on:
- Your supplier — smaller suppliers with under 150,000 customers did not administer ECO, so their customers may see a smaller reduction because the £59 ECO component was not in their prices.
- Your tariff type — most suppliers confirmed they would pass on the savings to fixed-tariff customers as well as standard variable tariff customers, following pressure from MoneySavingExpert's Martin Lewis.
- Your location — Northern Ireland has a separate regime. ECO did not apply there, so no ECO-related saving.
- Other price cap moves — the April 2026 price cap reduction is approximately 6% versus January 2026, but other cost components (network costs, Warm Home Discount recovery) offset some of the Budget policy savings.
What happens to ECO-supported households
The ECO scheme required energy suppliers to fund energy efficiency installations — insulation, boilers, heating upgrades — in low-income and fuel-poor homes. It generated around £1.7 billion a year. Its scrapping is controversial:
- A National Audit Office (NAO) report in October 2025 found significant failings, including poor-quality solid wall insulation leaving homes in need of repair.
- Chancellor Reeves described it as a "failed scheme" that had cost households £1.7 billion a year while benefiting only a small share of fuel-poor families in meaningful savings terms.
- A nine-month partial extension to December 2026 — subject to Parliamentary approval — allows existing ECO4 work that is already in progress to be completed.
- The Warm Homes Plan (£500 million over three years) replaces ECO for energy efficiency funding, although industry commentators have flagged this is materially smaller than the ECO budget.
Other energy-related Budget changes
- Warm Home Discount — £150 off annual bills continues, benefiting 6 million households.
- Boiler Upgrade Scheme — £7,500 grant for heat pumps — retained.
- EV purchase grants — extended to 2029/30 — the longest commitment the UK has made.
- EV mileage tax (eVED) — new 3p/mile charge on battery EVs from April 2028 (1.5p/mile on plug-in hybrids), rising annually with inflation.
- Price cap for July 2026 — announcement due by 27 May 2026. Cornwall Insight currently forecasts a Q3 cap of around £1,972 due to Middle East wholesale price pressure.
What consumers should do
- Check your April bill — confirm your unit rates have dropped by the headline figures.
- If on a fix — check with your supplier that the savings have been passed on. Most have confirmed they will, following the Martin Lewis campaign.
- Compare before renewal — the April cap is lower, but forward forecasts for July suggest a significant increase. Run the maths before committing to a new fix.
- Check Warm Home Discount eligibility — you may qualify automatically if on certain benefits.
- If ECO4 work was in progress — the nine-month extension allows existing projects to continue. Contact your installer.
Disclaimer
This article is for general information only. Energy tariffs, the price cap and government support schemes are subject to change. Check your specific tariff and contact your supplier or the Citizens Advice Consumer Helpline (0808 223 1133) if you are struggling with energy bills. For eligibility checks on Warm Home Discount and other support, check GOV.UK.
FAQ
Why did my bill not drop by exactly £150?
The £150 is the average. Savings vary by consumption, supplier, tariff type and location. Low-use households save less in cash terms; high-use households save more.
Is the Renewables Obligation change permanent?
The government announced three years of 75% Treasury funding (2026/27 to 2028/29). Future years are subject to future Budgets.
Does the saving apply in Northern Ireland?
ECO did not apply in Northern Ireland. The Northern Ireland Executive decides whether to mirror the Renewables Obligation change.
