2025 Budget £150 energy bill discount

Morning ​@Firedog, thanks for posting.

We’re not sure as of yet, but will be sure to update you as soon as we have any news on this.

And now we learn that some of the effect of the budget reduction on our bills is going to be offset (clawed back) to fund upgrading the distribution networks:

From the BBC:
Energy grid investment of £28bn to push up household bills

The Ofgem Press Release:
Ofgem unlocks £28 billion investment to maintain a safe, secure and resilient energy grid and to upgrade and expand capacity to meet growing demands

In total £108 will be added to bills by 2031. £48 for gas and £60 for electricity. Alongside maintaining grid resilience this investment will deliver significant savings of around £80 compared to not expanding the grid.

Electricity grid expansion alone is expected to reduce bills by £50 by 2031, thanks to lower reliance on imported gas and the halting of constraint costs ensuring power flows efficiently from where it’s generated to where it’s needed, even at peak demand. In short, investing now is cheaper for consumers than delaying, and electricity grid investment more than pays for itself.

Overall the net increase in bills to cover all costs by 2031 will be around £30 or less than £3 per month with costs expected to fall further over time.

Jam tomorrow then.

No, I didn’t think you would be - it will take time to work out how best to do this. I’m wondering:

• Will Ofgem impose a solution?
• Or will some|all suppliers collaborate to find a solution?
• Will customers be invited to make suggestions?

There is a slightly awkward question about whether the reduction should apply to those on fixed-rate tariffs or not. After all, some of us fixed our rates this year in order to avoid increases in standing charges that we suspected were on the way as policy costs rose - as I wrote nine months ago, “I’m still hoping to avoid the 4-5p/day increase in the standing charge that the proposed expansion of the Warm Home Discount scheme could cost from 2025Q3. And, of course, any other increases Ofgem may dream up.” 

If fixed-rate customers are immune from policy cost increases, can they legitimately expect to benefit from policy cost cuts?
  

PS The SC increase to pay for the expanded WHD scheme turned out to be 4.7p/day:
  

It’ll be interesting to see what happens. So far what’s been announced by the Chancellor has been re-iterated to us internally, but without any details as of yet for how the £150 saving will actually look.

We’ll let you know when we know any further news on this that we can chare with customers.

This article from Martin Lewis regarding his conversation with Ed Milliband has the view that it should apply to all customers 

I wouldn't be so hasty about expecting a long term decrease in your fuel bills.

The government moved the ECO costs to general taxation, decreasing fuels bills but the Ofgem RIIO-3 final determinations (Revenues = Incentives + Innovation + Outputs) which come into effect in April 2026 is set to increase electricity bills by a similar amount. This increase is to pay for extra transmission links across the Scottish border so that wind power generated can be brought south instead of being constrained (which we pay double for) and for the new nuclear projects like Sizewell C and increases to transmission costs (TNUoS) are accounted for.

https://www.ofgem.gov.uk/decision/riio-3-final-determinations-electricity-transmission-gas-distribution-and-gas-transmission-sectors

There is better news for those who use gas as the upcoming glut of LNG (from the US, Middle East and other emerging sources) has caused the prices to drop this winter (usually they increase due to demand) and drop even lower on the Futures market for this summer. A good tariff to be looking at is a Tracker. 

Peter

Yes, but this approach is really questionable. Suppliers have in the past couple of years seen staggering increases in the policy costs the exchequer requires them to pay, so of course they have to pass them on to customers:
  

Rows with no Scheme label are my own calculations. The bottom line indicates how the total cost applies to the typical household consuming 2700 kWh of electricity per year. Over the past twelve months, it has risen by £87. It is up to suppliers how they allocate costs to unit rates and standing charges, although the price cap limits the standing charges they’re allowed to levy for those on Standard Variable Tariffs (like OVO’s ‘Simpler energy’).  

Fixing rates for a period protects customers from rising costs during that period, including policy costs (= taxes). It also renders them liable to missing out should costs fall - that’s the gamble we take. Mr Milliband’s exhortation drags the future of fixed rates into doubt; we have already seen that Scottish Power have introduced a ‘partial fix’, where the cost is fixed with regard to changing wholesale costs, but moves up or down with the other costs.    

Hi all

I’ve been on a FR tariff since Aug 2025 and was expecting a communication to confirm details of the tariff reduction from 1 April due to the levy changes introduced by Gov and announced earlier this year. I was told today firstly as I’m on a FR then I get no reduction. Disputed that then told as my tariff rate is less than the price cap from 1 April I might not get it. Explained the price cap is irrelevant and irresepective of wholesale prices, my tariff should reduce in line with the Gov policy announcements and this is stated on their website. After 40 mins of mainly waiting finally got told the reduced rate and an apology for not getting the communication confirming this. Made me wonder if only people who query it who are on a FR will get it - not only that but also only those who dispute what they are first told, as staff have clearly not been made aware of this. So question is there anyone on a FR who has received an automatic comms confirming their reduction as a result of levy reduction ? Or am I in the minority?

Hi ​@Ren100 ,

Emails are literally going out right now! I just got mine a couple of hours ago.

Please hang in there for a bit - sending out several million emails takes several days due to infrastructure limits. You will get the discounts because the reductions are caused by certain elements being removed from ALL tariffs - including existing Fixed Rate Tariff contracts.

Many thanks ​@Blastoise186 

Yes I knew I was entitled to the discount hence my disputing with Customer Services until I raised a complaint and they checked with that team. Cust Serv didn’t have a clue about it or the timing of the automatic comms. I was previously told they would go out 3 weeks beforehand and told today (after they confirmed I would get a discount) for some reason I was missed in the automatic comms. 

Do tell - how much was the reduction in the unit rate? It started off at 3.54 p in November, but sems in many cases to have shrunk to 3.51 p now (those figures include VAT; the ex VAT numbers are 3.37 p and 3.34 p respectively). 

I don't have the rates, but my drop is about £60 a year 

I think it must vary .. my reductions in unit rate are

Day 3.5 p

Peak 3.51 p

Off-peak 3.51 p

Gas 3.2 p

Well, I can work backwards using the DD Calculator, which has now moved into ‘last fortnight of Winter’ mode. This means that costs for the rest of this month are calculated using current rates, while those for the next year use the soon-to-be-introduced rates. This leads me to find that the new inc. VAT unit rate is 3.51p/kWh less than the current one (if you prefer, the ex VAT figure is 3.34p/kWh less than today’s).

I still haven’t found out why the general reduction in electricity rates is less than was originally suggested: 3.34p/kWh instead of 3.37p/kWh. That’s less than £1 a year for the typical customer, but it’s 30p/MWh off the supplier’s bill, which I suppose isn’t to be sneezed at.

I received this on Friday 20th March.

Like you, my fix rate ends in August so we will only benefit from this reduction until then as it is predicted that a large increase is likely in July.

​@Ren100 sorry to hear of the experience you had - it sounds like the advisor may have been new to the business - there’s so much to learn when starting out in our Support Team. I’m glad you received the correct advice eventually, and hopefully you’ll receive the new rates info soon.

My electric is going down 3.3 and gas 3.1.

Many thanks ​@Ben_OVO 

​@Ren100 glad you’ve received confirmation now - I received mine last night as well.

I’ve not received the official confirmation with the estimated breakdown of how much this could save me etc. I received a summary of my call which confirmed free written what the new tariff rates would be. 

Kind regards

If you’ve not received the email/letter yet there’s a 99% chance you’re in later waves or batches and should get it soon. As much as OVO would like to just blast the entire lot out at once, there’s limits on email infrastructure such as rate limiting which means they have to send them out in smaller chunks.

This is unfortunately way beyond OVO’s control as it’s upstream from them.

My notification email turned up last night, so at last I can check how it’s calculated. Mine is an Extended Fixed plan expiring in August this year 😟

(a)  The ‘estimated annual costs’ use the same basis as the Direct Debit calculator, but the Future Annual Consumption figure is two weeks out of date. This is clear from the ‘current estimated annual costs’, and explains why I couldn’t reconcile things earlier.
(b)  In order to arrive at the same ‘new estimated annual costs’, given an unchanged Standing Charge, I have to deduct precisely 3.34p from the current unit rate. The monthly balances for the next 13 months are then reproduced to the penny by my simulator.
(c)  The cost of the Renewables Obligation was indeed revised in February, with the result that 75% of it due to be removed from electricity bills fell from 2.4795 to 2.4546 p/kWh. Given a bit of rounding for simplicity, the final reduction to bills is 3.34 p/kWh and not the 3.37 p we’d originally hoped for. 
  

[EDIT for clarity]

The figures given above are ex VAT. Some communications from suppliers may include VAT, others not, and rounding may vary. This is what I reckon the VAT inc numbers should be: 

Electricity: 3.34514 + 5% = 3.512397, rounded to 3.51 p/kWh inc VAT
Gas: 0.314765 + 5% = 0.330503, rounded to 0.33 p/kWh inc VAT.

Just a  reality check here - Shouldn’t that reduction to the gas rate be 0.32 p ?

(My current unit rate for gas is 5.64 p/kWh, so a reduction of 3.2p would more than half my gas bill).

EDIT - I just read the email from OVO which estimates a £86.86 yearly saving for me, which is spookily close my own calculation of a £86.52 saving, for which i had used a 3.37p reduction in my electricity rate and a 0.31p reduction in my gas rate.
(Until OVO comfirm my new rates I’m assuming that the difference is simply the FAC that each of us used).

Yes - you’re correct of course - the reduction is 0.32 p. I pay little attention to gas these days as it’s only our gas hob in use.