Energy bills are seeing a slight increase starting today with the implementation of the new Ofgem price cap. For households paying through direct debit, the typical annual energy bill will go up from £1,755 to £1,758. This price cap sets limits on unit rates for gas and electricity, as well as standing charges.
If you are not on a fixed energy tariff, you will fall under the price cap, which does not impose a total cap on energy payments, making your bill dependent on usage. The price cap for pre-payment meter users is rising from £1,707 to £1,711 annually, while those paying upon bill receipt will see an increase from £1,890 to £1,894 per year.
The price cap is updated every three months, so expect another change in April 2026. Despite being 2% or £37 lower compared to earlier in the year, households are still paying significantly more for energy. Which? advises considering a switch to a fixed tariff to save money.
Ofgem attributes the latest price cap increase to government policy costs and operational expenses, including funding for projects like the Sizewell C nuclear initiative and the Warm Home Discount scheme. Chancellor Rachel Reeves announced in the November Budget that households could expect an average annual energy bill reduction of £150 from April 2026, achieved by eliminating certain green levies.
The Energy Company Obligation (ECO) is set to conclude in March 2026, and contributions towards the Renewables Obligation (RO) scheme will be decreased. Most energy providers have confirmed that savings resulting from fixed tariffs will be passed on to customers. Analysts forecast a possible price cap reduction to £1,620 in April 2026, a drop of £138.