Energy bills are increasing slightly starting today with the implementation of the new Ofgem price cap. For households paying through direct debit, the yearly energy bill will go up from £1,755 to £1,758 due to the cap regulating gas and electricity unit rates and standing charges.
The price cap does not impose a total limit on energy expenses, as costs still vary based on individual energy usage for those not on a fixed tariff. Specifically, the price cap for pre-payment meter users will rise from £1,707 to £1,711 annually, while those paying on receipt of bill will see an increase from £1,890 to £1,894 per year.
This price cap adjustment occurs every three months, with the next change scheduled for April 2026. Despite the 2% or £37 reduction compared to the previous period, households are still paying significantly more for energy. Consumer watchdog Which? advises switching to a fixed tariff to save money.
According to Which? energy editor Emily Seymour, as winter approaches, households should consider exploring cheaper deals below the price cap, preferably with shorter terms and minimal exit fees. Ofgem attributes the latest price cap increase to government policy costs, including funding for projects like Sizewell C nuclear and the Warm Home Discount scheme.
In the November Budget, Chancellor Rachel Reeves announced an average annual energy bill reduction of £150 for households from April 2026 by eliminating certain green levies. The Energy Company Obligation will cease in March 2026, and contributions towards the Renewables Obligation scheme will be reduced.
Most energy suppliers assure that fixed tariff customers will benefit from the savings. Cornwall Insight analysts predict the price cap to drop to £1,620 in April 2026, indicating a £138 decrease.