DESNZ publishes guidance on domestic energy tariff reductions
The Department for Energy Security and Net Zero (DESNZ) has published its guidance for domestic energy suppliers on the implementation of mandatory tariff reductions from 1 April 2026, following the government’s commitment in the 2025 Autumn Budget to reduce average household energy bills by around £150. The guidance explains how suppliers must apply discounts to domestic electricity and gas tariffs arising from two policy changes: (1) the introduction of the Renewables Obligation (RO) to Exchequer scheme, under which 75% of domestic RO costs are removed from electricity bills and replaced with Exchequer funding, and (2) the closure of the Energy Company Obligation (ECO4) and Great British Insulation Scheme (GBIS), with associated savings required to be passed through to consumers. These obligations are imposed through the RO and ECO Costs Schemes Direction 2026, made under section 22(1)(b)(iv) of the Energy Prices Act 2022, which requires domestic suppliers to adjust tariffs from 1 April 2026 and, in the case of electricity suppliers, provides for Exchequer payments to replace foregone RO revenues.