Energy bills are set to increase slightly starting today with the implementation of the new Ofgem price cap. Household energy bills for those paying via direct debit will see a rise from £1,755 to £1,758 annually under this new cap, which governs the maximum charges for gas and electricity unit rates and standing charges.
The price cap does not impose a total limit on energy costs, as they still vary based on actual usage. Individuals not on a fixed energy tariff will fall under this price cap. For those using pre-payment meters, the price cap will rise from £1,707 to £1,711 per year, while those paying upon receipt of the bill will witness an increase from £1,890 to £1,894 annually.
This price cap is subject to quarterly updates, with the next adjustment scheduled for April 2026. Despite being 2% or £37 lower than the previous period earlier this year, households continue to face higher energy expenses. Which?, a consumer advocate group, recommends considering a switch to a fixed tariff for potential savings.
Ofgem attributes the latest price cap increase to government policy and operational costs, including contributions towards projects like Sizewell C nuclear plant and the Warm Home Discount scheme. Chancellor Rachel Reeves announced in the November Budget that households can expect an average annual £150 reduction in energy bills by April 2026, achieved by eliminating certain green levies.
With the Energy Company Obligation (ECO) ending and reductions in contributions to the Renewables Obligation (RO) scheme, most fixed tariff customers are expected to benefit from the cost savings. Energy market analysts forecast the price cap to drop to £1,620 in April 2026, representing a £138 decrease.