Energy bills are set to increase slightly starting today with the enforcement of the new Ofgem price cap. For households paying through direct debit, the annual energy bill is expected 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 apply to the total energy bill, which still varies based on individual consumption of gas and electricity. Customers not on fixed energy tariffs will automatically fall under the price cap.
Moreover, the price cap for customers using pre-payment meters will increase from £1,707 to £1,711 annually, while customers paying upon receipt of the bill will see their yearly charges rise from £1,890 to £1,894.
This price cap adjustment takes effect every three months, with the next change scheduled for April 2026. Despite this increase, the new price cap is 2% lower or £37 less than the previous period earlier this year. Consumer advocacy group Which? recommends exploring fixed tariff options to potentially save money.
According to Which? energy editor Emily Seymour, households should consider switching to deals below the price cap, ideally with no significant exit fees and lasting no longer than 12 months. Ofgem attributes the latest price cap increase to government policy costs and operational expenses linked to projects like the Sizewell C nuclear venture and the Warm Home Discount scheme.
In a recent announcement, Chancellor Rachel Reeves disclosed plans to reduce average annual energy bills by £150 from April 2026 by eliminating certain green levies. Notably, the Energy Company Obligation (ECO) is set to conclude in March 2026, and contributions towards the Renewables Obligation (RO) scheme will be reduced.
Most energy suppliers have pledged to pass on savings from these changes to customers on fixed tariffs. Energy analysts predict a potential drop in the price cap to £1,620 by April 2026, translating to a £138 reduction for consumers.
