Energy bills are increasing slightly starting today with the implementation of the new Ofgem price cap. For households paying through direct debit, the annual energy bill will rise from £1,755 to £1,758. This price cap governs the maximum charges for gas and electricity unit rates along with standing charges.
The price cap does not set a total limit on energy costs, as they still vary based on individual consumption. Those not on a fixed energy tariff will fall under the price cap.
For customers using pre-payment meters, the price cap is rising from £1,707 to £1,711 annually, while those paying upon receipt of the bill will see an increase from £1,890 to £1,894 per year.
The price cap undergoes updates every three months, with the next change scheduled for April 2026. Though the new cap is 2% or £37 lower than the previous period earlier in the year, households continue to face higher energy expenses. Consumer advocate Which? recommends considering a switch to a fixed tariff to save money.
According to Which? energy editor Emily Seymour, as winter approaches, households may be concerned about the slight increase in the energy price cap for the new year. She advises exploring deals below the price cap, ideally with durations shorter than 12 months and minimal exit fees.
Ofgem attributes the latest price cap increase to government policy costs and operational expenses, including support for projects like the Sizewell C nuclear initiative and the Warm Home Discount scheme.
In the November Budget announcement, Chancellor Rachel Reeves stated that households can expect an average annual £150 reduction in energy bills from April 2026 by eliminating various green levies. The Energy Company Obligation (ECO) is set to conclude in March 2026, and contributions towards the Renewables Obligation (RO) scheme will be lessened.
Most energy providers have confirmed that savings from fixed tariffs will be passed on to customers. Energy analysts from Cornwall Insight project a drop in the price cap to £1,620 by April 2026, equating to a £138 decrease.