Energy bills are increasing slightly starting today due to the implementation of the new Ofgem price cap. For households paying through direct debit, the annual energy bill is set to rise from £1,755 to £1,758. The price cap governs the maximum charges for gas and electricity unit rates along with standing charges.
Notably, the price cap does not impose a total limit on energy expenses, as the bill amount still hinges on individual gas and electricity usage unless one is on a fixed energy tariff. The price cap for users paying via a pre-payment meter is climbing from £1,707 to £1,711 annually, while those paying upon receipt of the bill will witness an increase from £1,890 to £1,894.
This price cap is subject to adjustment every quarter, with the next change scheduled for April 2026. Despite being 2% or £37 lower compared to the same period last year, households are facing higher energy costs overall. Consumer advocate Which? is recommending switching to a fixed tariff to achieve savings.
Ofgem attributes the latest price cap rise to government policy expenses and operational costs, including contributions towards projects like Sizewell C nuclear and the Warm Home Discount scheme. Chancellor Rachel Reeves announced in the November Budget that households can expect an average annual energy bill reduction of £150 starting from April 2026, achieved through the removal of various green levies.
The Energy Company Obligation (ECO) is slated to conclude by March 2026, and contributions to the Renewables Obligation (RO) scheme from households will be decreased. Most energy providers have committed to passing on the savings to customers on fixed tariffs. Energy analysts at Cornwall Insight predict a drop in the price cap to £1,620 in April 2026, resulting in a £138 reduction.