Energy bills are increasing slightly starting today as the new Ofgem price cap takes effect. For households paying via direct debit, the annual energy bill will rise from £1,755 to £1,758. This cap controls the maximum charges for gas and electricity unit rates, as well as standing charges.
The price cap does not impose a total limit on energy payments, meaning actual bills still vary based on usage for those not on fixed energy tariffs. Those using pre-payment meters will see their cap rise from £1,707 to £1,711 annually, while those paying upon receiving a bill will experience an increase from £1,890 to £1,894 yearly.
Updated every three months, the price cap is set to change again in April 2026. Despite being 2% or £37 lower than the prior period this year, households are paying significantly more for energy. Consumer advocate Which? advises considering a switch to a fixed tariff for potential savings.
According to Which? energy editor Emily Seymour, with the approaching colder months, many households may be concerned about the slight rise in the energy price cap. Seymour suggests exploring deals below the price cap, recommending options cheaper than the current cap, not exceeding 12 months, and without substantial 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. Chancellor Rachel Reeves announced in November’s Budget that households can expect an average annual energy bill reduction of £150 starting April 2026 by eliminating various green levies.
The Energy Company Obligation (ECO) will conclude in March 2026, with reduced contributions from households towards the Renewables Obligation (RO) program. Most energy providers confirm passing on the savings to customers on fixed tariffs. Energy analysts predict the price cap will decrease to £1,620 in April 2026, amounting to a £138 reduction.