Energy bills are set to increase slightly starting today with the implementation of the new Ofgem price cap. For households paying via direct debit, the annual energy bill will rise from £1,755 to £1,758 under the new cap. This cap governs the maximum charges for gas and electricity unit rates, as well as standing charges.
The price cap does not impose a total limit on energy expenses, meaning the final bill depends on actual energy usage. Individuals without a fixed energy tariff will fall under the price cap. Meanwhile, the price cap for those using pre-payment meters will rise from £1,707 to £1,711 annually, and for individuals paying upon receipt of the bill, it will increase from £1,890 to £1,894 per year.
Updates to the price cap occur every three months, with the next adjustment scheduled for April 2026. Despite the current cap being 2% or £37 lower than the previous period, households are still facing higher energy costs overall. Consumer advocate Which? advises consumers to explore fixed tariff options for potential savings.
According to Which? energy editor Emily Seymour, as winter approaches, many households may be concerned about the slight uptick in the energy price cap for the new year. Seymour recommends exploring deals below the price cap, with terms not exceeding 12 months and minimal exit fees.
Ofgem attributes the latest price cap increase to government policy costs and operational expenses, such as supporting projects like Sizewell C nuclear plant and the Warm Home Discount scheme. In the Budget announcement last November, Chancellor Rachel Reeves stated that households can expect an average annual energy bill reduction of £150 from April 2026 by eliminating various green levies.
The Energy Company Obligation (ECO) is set to conclude by March 2026, while household contributions to the Renewables Obligation (RO) scheme will be reduced. Most energy providers have assured that fixed tariff customers will benefit from these savings. Analysts at Cornwall Insight anticipate a reduction in the price cap to £1,620 in April 2026, reflecting a £138 decrease.