The UK energy market in April 2026 is not a simple story. Your energy bill has genuinely fallen - and that's real money back in your pocket.
But the past eight weeks brought one of the sharpest shocks to European gas markets since 2022. A fragile ceasefire has partly unwound the damage. The situation in mid-April is calmer than it was in March - but calmer and calm are not the same thing. This is a market in recovery mode, not a market at rest.
1. Where the cap landed -and why
Ofgem set the Q2 2026 energy price cap at £1,641 for a typical dual-fuel household. That's £117 less (6.6%) than the £1,758 Q1 level - roughly £10 a month off your gas bill and electricity bill combined.
Two factors drove the reduction. First, wholesale gas prices had eased before Ofgem set the Q2 figures. Ofgem bases the cap on a rolling average of forward contracts. A calmer autumn and early winter meant lower prices feeding into Q2 rates.
Second, the government's £6.9 billion bill discount scheme kicked in from April 2026. It removes green and social levies from your unit rates. That includes renewable subsidies, the Warm Home Discount, and smart meter costs. Those costs move to general taxation instead. This alone has pulled the cap lower than wholesale prices would suggest.
What changed on your bill from 1 April
The levy removal already shows in your new unit rates - you don't need to do anything. It applies automatically to all customers on the default tariff or any tariff that follows the cap. The reduction lasts three years, though future cap movements will still track wholesale prices.
April 2026 unit rates
| Fuel | Unit rate (p/kWh) | Standing charge (p/day) |
|---|---|---|
Electricity |
24.67p | 57.21p |
Gas |
5.74p | 29.09p |
Ofgem Q2 2026, typical dual-fuel household, direct debit. England, Wales & Scotland. Standing charges vary by region.
2. The shock that hit between the cap being set and now
Ofgem calculates the cap on data from weeks and months before it takes effect. By the time April arrived, the market had moved dramatically -in the wrong direction.
What followed was a sharp sequence of events in the Middle East that sent European wholesale gas prices into territory not seen since 2022.
US and Israeli missile strikes hit Iranian facilities. Markets immediately priced in the risk of supply disruption through the Strait of Hormuz, the waterway that handles roughly 20% of global LNG shipments.
Iranian drone strikes hit QatarEnergy infrastructure. Qatar -a major source of Europe's LNG -declared force majeure, formally suspending contracted supply obligations. The Strait of Hormuz came under direct threat of closure.
Dutch TTF gas benchmark nearly doubled to over €60/MWh. TTF had been trading at €30–35/MWh through much of the preceding winter. European gas storage, already depleted by a harsh 2025/26 winter, sat at approximately 28–30% capacity -levels not seen since the 2022 energy crisis.
Fixed energy tariffs pulled or repriced across the market. Most major suppliers suspended below-cap fixed deals as forward price uncertainty made long-term pricing unviable. The comparison market thinned significantly.
US-Iran two-week ceasefire agreed, mediated by Pakistan. Brent crude fell 13% and TTF gas dropped over 16%, falling below €45/MWh. Fixed tariff availability began to cautiously improve.
Iran's foreign minister declared the Strait of Hormuz "completely open." Oil prices fell further -WTI dropping to ~$83.85/barrel. Markets welcomed the signal, though ship traffic through the strait remained significantly below pre-conflict levels.
Talks ongoing. Pakistan is hosting US-Iran talks on a broader deal. A US delegation is reportedly en route. The ceasefire holds, but it remains fragile.
Strait of Hormuz shipping traffic is recovering slowly.
The storage problem doesn't go away with a ceasefire
European gas storage stood at around 28% at the end of winter, with Germany at just 22%. The European Commission has urged member states to refill urgently. Getting from ~28% to a safe 90%+ by autumn means buying huge volumes of gas through spring and summer, competing in a market where LNG supply chains are still recovering. That demand pressure on prices stays even as the conflict risk fades.
3. What the July cap is now expected to be
The good news: the Q3 2026 forecast has come down from its worst-case levels. Cornwall Insight's March estimate put the July-September cap at £1,929 - reflecting peak market panic. Their April update, factoring in ceasefire developments, has brought that down to £1,837.
Q3 figure: Cornwall Insight forecast, April 2026. Down from earlier peak estimate of £1,929. Subject to revision as wholesale markets evolve. Ceasefire dynamics and European storage refill progress will be key variables.
Even at £1,837, the July cap would be higher than Q1. If you're celebrating a lower energy bill this April, the relief may be short-lived.
Three things will decide what happens next: whether the ceasefire holds, how fast Hormuz shipping returns to normal, and how quickly Europe refills its gas storage. Those three factors will shape the Q3 cap before Ofgem sets it.
Three scenarios for July
Ceasefire collapses, Hormuz disruptions resume, European storage refill falls behind. Markets reprice to crisis levels. Earlier worst-case estimate returns.
Ceasefire holds, shipping slowly normalises, storage refills at a moderate pace. Current Cornwall Insight forecast reflects this trajectory.
Broader peace talks succeed, Hormuz fully reopens, LNG flows recover sharply. Storage refill accelerates. Wholesale prices return toward pre-crisis levels.
The base case remains the most likely outcome. The bear case is still possible given how fragile current arrangements are. The bull case requires a diplomatic breakthrough that has not yet occurred.
4. The fixed tariff market: where things stand
Suppliers pulled or repriced most fixed rate tariffs during the March peak. Availability is gradually returning. A handful of energy companies are offering fixed deals again, though the choice is narrower than you'd normally see in spring.
| Supplier / Tariff | Type | Position vs cap | Key detail |
|---|---|---|---|
| E.ON Next Pledge | Fixed | ~£100 below cap | Guaranteed below Ofgem cap for the contract term. ~£1,541/yr annualised. |
| E.ON Next Steady | Hybrid | Below cap now; fixed from July | Offers Q2 savings then locks in ahead of the Q3 rise. Good bridge option. |
| British Gas Fixed Tracker | Fixed | Below cap for contract term | Tracks below the Ofgem cap. Protects against cap rises while passing through any cap reductions. |
| Default (variable) | Variable | At cap: £1,641 | Will rise to ~£1,837 in July if forecast holds. No exit fee. Maximum flexibility. |
Tariff details indicative. Availability varies by region and circumstances. Check current rates before switching.
Why the market is still thin
Even with the ceasefire in place, suppliers are building uncertainty into their forward prices. Until Hormuz shipping fully returns to normal and Europe makes clear progress on refilling gas storage, most energy companies won't commit to cheap long-term fixed deals. The deals available right now reflect that caution - but they also represent the current window to switch energy supplier.
5. What should you actually do?
This is the question that matters, and the honest answer depends on two things: how much risk you can tolerate, and what the current best available fixed deal costs relative to the cap.
Our read of the situation
If you can find a 12-month fixed rate tariff priced within £50-£100 of the current cap, it's a solid choice for most households. The base-case July forecast of £1,837 means you'd pay roughly the right price across the year - without the risk of a Q3 jump or things getting worse.
The ceasefire is a genuine positive development, and it's right to acknowledge that. But it's a two-week agreement between parties with significant outstanding differences, and the structural problem of Europe's depleted gas storage doesn't resolve quickly. Prices have eased from crisis levels; they haven't returned to pre-crisis levels.
If you're on a tight budget, the certainty of a fixed deal is worth more than gambling on the cap. If your finances are comfortable and you believe the ceasefire holds, staying on the variable tariff is a fair choice - just keep one eye on the July figure.
Either way, compare your options now. The fixed deals available today may not exist in the same form in two weeks, particularly if diplomatic news shifts in either direction.