The Government has instructed energy companies to ensure that customers on fixed tariffs also benefit from the £150 reduction in household bills, a measure announced in the recent Budget.

Chancellor Rachel Reeves confirmed her intention to lower energy costs and alleviate the cost of living, with an average household bill set to decrease by £150 from April.

This saving, Ms Reeves explained, would be achieved by abolishing the Energy Company Obligation (Eco) scheme, which she asserted had burdened households with an additional £1.7 billion annually.

Energy Secretary Ed Miliband formally wrote to energy firms on Wednesday, urging them to extend the benefit of this reduction to consumers currently on fixed energy tariffs.

These tariffs guarantee a consistent unit rate and standing charge for the duration of the agreed contract, typically a year or longer.

In contrast, those on standard variable tariffs experience fluctuating rates, which adjust according to wholesale market costs paid by suppliers, without a set timeframe.

In his letter, Mr Miliband wrote: “This Government has made a clear commitment to cut people’s bills and help ease the financial pressure on millions of families, as we know energy costs cause such anxiety for many people, and that is why we are acting now.

“As we move forward, we want to set out our clear expectation that every single penny of our intervention at this Budget is passed on to consumers, including those on existing fixed term tariffs.

“Around 37% of the market is now on a fixed term tariff and Government is clear that they must benefit from this reduction in bills.

“We urge you to continue to work with our department to ensure that this happens.

“This close, joint working will be both welcomed and reassuring for customers, demonstrating our shared commitment to fairness and consumer protection.

“Thank you once again for your partnership and for your efforts to ensure that these positive changes reach every household.”

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According to latest Ofgem figures, around 21 million domestic customers’ energy accounts are on fixed tariffs, while around 34 million remain on standard variable tariffs.

Ned Hammond, deputy director of customer policy at Energy UK, which represents suppliers, said: “The energy industry has long called for Government action to reduce costs, having seen directly how many households are struggling to afford their energy bills and with customer debt at record levels.

“So last week’s Budget announcement was very welcome and suppliers will of course look to pass on the savings. However, it’s also expected that there will be some new costs added to bills over the coming months.

“While most customers remain on the price cap, where the amount they pay for energy is set by Ofgem, suppliers also set their own fixed tariffs to compete on price with each other and so have every reason to pass on any cost savings with these.”