Energy firms have been urged to fully commit to Labour’s pledge to cut energy bills by £150 for the average household through changes announced at the Budget.
Rachel Reeves announced several measures at the fiscal event which she said would deliver substantial cuts for thousands of households. This included ending the energy company obligation (ECO) scheme, which removed the levies that the programme adds to energy bills.
The chancellor also announced that 75 per cent of the cost of subsidies for older renewables projects, known as the “renewables obligation”, would be taken off electricity bills and into general taxation.
Combined with the VAT savings from these two measures, the average household should save £154 a year, the chancellor said.
But in the days after the Budget, energy secretary Ed Miliband wrote to providers to express the government’s “clear expectation” that “every single penny” of savings from these changes be passed on to energy bills.
The former Labour leader added that these savings must also be passed on to energy customers on fixed energy contracts, despite these locking in at an agreed rate for a set period.
Octopus Energy, which became the UK’s largest energy supplier in January, has confirmed it will pass the savings on automatically to both variable and fixed tariff customers from 1 April.
Greg Jackson, CEO and founder of Octopus Energy, said: “Octopus has long called for cuts in policy costs to help bring bills down, so we are delighted to see the government taking action.
“These changes will bring a welcome relief to customers, and we’ll pass them through on all of our tariffs as soon as they kick in, so no one misses out.
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“Octopus customers can rest easy – we’ll do it all automatically. We hope other suppliers will follow our lead so everyone can benefit.”
E.ON Next and British Gas have also confirmed that they will take a similar approach, with a simple rates cut for all customers from April.
E.ON Next said: “When these savings start in April, we’ll pass them on in full to all our customers. No ifs. No buts. No small print. People are under pressure and they deserve to feel the benefit directly on their bills.”
British Gas said: “We welcome the Government’s steps to ease energy costs as we’ve called for these levies to be moved into general taxation for some time.
“We’ll of course ensure all our customers benefit – including those on fixed-term tariffs.”
ScottishPower said it is “closely engaging with the Government” over how the changes will be implemented, adding: “Our expectation is that the changes will apply to both variable and fixed term tariffs from 1 April to ensure all customers see the benefits”.
OVO and EDF have also both confirmed that they will be passing on the savings in full to their customers for both fixed and variable tariffs.
An OVO spokesperson added: “From 1 April 2026, we will automatically reflect the savings across all our tariffs, so customers see the benefit without needing to take any action.”
An EDF spokesperson added: “The full details of what this means for individual customers will be confirmed later, once there is clarity on how Government and Ofgem will apply these and other cost changes that are forecast.”
Money expert Martin Lewis has been putting pressure on all energy firms to outline exactly how they will introduce the cut, advising that all should take a similar approach to Octopus, E.ON and British Gas.
Explaining how much households will save from the changes, he said: “The cut to the price cap will be via a 3.5p/kWh (c.13%) reduction in electricity prices and a 0.35p/kWh (c.6%) reduction in gas prices, if everything else remains equal.”
“Everything else is unlikely to remain equal, as the April price cap was expected to rise, so the actual pound-in-your-pocket cuts will be a little less than this, currently around a 6% reduction in April’s Price Cap over January’s is predicted,” the money guru explained on X.
