Energy bills are increasing 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. This cap dictates the maximum charges for gas and electricity unit rates, as well as standing charges.
Notably, the price cap does not restrict the total amount a consumer can pay for energy, as it is dependent on individual usage. Those not on a fixed energy tariff will fall under the price cap.
Furthermore, individuals using pre-payment meters will see their price cap rise from £1,707 to £1,711 annually, while those paying upon receipt of the bill will experience an increase from £1,890 to £1,894 per year.
The price cap undergoes quarterly updates, with the next adjustment scheduled for April 2026. Despite being 2% or £37 lower than the previous period earlier this year, households are still facing higher energy costs. Consumer advocacy group Which? recommends considering a switch to a fixed tariff to save money.
Ofgem attributes the latest price cap hike to government policy costs and operational expenses, which include funding for projects like the Sizewell C nuclear endeavor and the Warm Home Discount scheme.
In a recent budget announcement, Chancellor Rachel Reeves disclosed plans to reduce energy bills by an average of £150 annually from April 2026 by eliminating various green levies. Additionally, the Energy Company Obligation (ECO) will cease in March 2026, and contributions towards the Renewables Obligation (RO) scheme will be reduced.
Most energy providers have assured that savings from these changes will be passed on to consumers on fixed tariffs. Industry experts at Cornwall Insight predict the price cap will decrease to £1,620 in April 2026, a reduction of £138.