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 will rise from £1,755 to £1,758. This price cap regulates the maximum charges for gas and electricity unit rates and standing charges.
The price cap does not establish a total limit on energy payments; hence, the bill amount still depends on actual energy consumption for those not on a fixed tariff. The price cap for customers using pre-payment meters will increase from £1,707 to £1,711 per year, while those paying upon bill receipt will see an increase from £1,890 to £1,894 annually.
Updated every quarter, the price cap will be revised again in April 2026. Despite the 2% or £37 decrease compared to the previous year, households continue to pay higher energy costs. Consumer advocate Which? suggests considering a switch to a fixed tariff to save money.
Ofgem attributes the latest price cap hike to government policy and operational expenses, including support for the Sizewell C nuclear project and the Warm Home Discount scheme. Chancellor Rachel Reeves announced in the November Budget that households will save an average of £150 annually from April 2026 by eliminating various green levies from bills.
The Energy Company Obligation will conclude in March 2026, with reduced contributions towards the Renewables Obligation scheme. Most energy providers assure that fixed tariff customers will benefit from the savings. Cornwall Insight analysts forecast a price cap reduction to £1,620 in April 2026, a £138 drop.