Energy bills will fall by average £117 or 7% a year in April, said the industry regulator Ofgem, confirming earlier forecasts on the new price cap.
The cut will benefit consumers in Scotland, England and Wales and comes after Chancellor Rachel Reeves announced changes to the billing structure.
She said the typical annual household energy bill would fall by £150, by scrapping the Energy Company Obligation scheme introduced by the Conservatives in government, and also moving some charges onto general taxation.
The 7% fall in the price cap is the largest seen since last summer.
However, prices still remain relatively high by historical standards, debts have ballooned, and billpayers are being urged to shop around for further savings.
The new price cap is still £503 more than the amount that households were being charged before the energy crisis hit in the autumn of 2021.
Latest forecasts suggest the price cap is set to rise again slightly in July.
Richard Neudegg, director of regulation at Uswitch.com, said: “This 7% drop in April’s energy price cap is a meaningful cut for household bills, taking default tariffs to their lowest level in almost two years. While energy won’t feel ‘cheap’ for consumers, this is a welcome move in the right direction.”
Angharad Hopkinson, political campaigner for Greenpeace UK, said: “Stripping out levies from our bills will help struggling households, but significantly less than it should, because the cost of electricity is still set by volatile global gas prices.
“The government’s efforts to make energy more affordable could be wiped out by another gas price spike. People are crying out for lower energy bills, and the government must do more to help them by stopping gas from setting the price we pay for electricity.”
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