Energy bills have increased slightly starting today with the implementation of the new Ofgem price cap. For households paying by direct debit, the annual energy bill will rise from £1,755 to £1,758 under this new cap, which governs the charges for gas and electricity unit rates along with standing charges.
Notably, the price cap does not establish a total limit on energy expenses, as the final bill is influenced by individual energy consumption. Those not on a fixed energy tariff will fall under the price cap regulations.
For consumers using pre-payment meters, the price cap has increased from £1,707 to £1,711 annually. Similarly, individuals paying upon receipt of the bill will see their yearly charge go up from £1,890 to £1,894.
The price cap undergoes updates every three months, with the next adjustment set for April 2026. Despite the current cap being 2% or £37 lower compared to earlier this year, households continue to face higher energy costs. Consumer advocacy group Which? advises considering a switch to a fixed tariff to reduce expenses.
According to Which? energy editor Emily Seymour, now is an opportune time to explore lower-priced energy deals in the market. It is recommended to seek out deals cheaper than the existing price cap, with durations not exceeding 12 months and no significant exit fees.
Ofgem has attributed the recent price cap increase to government policy costs and operating expenses, including funding for projects like Sizewell C nuclear plant and the Warm Home Discount scheme. Chancellor Rachel Reeves announced in the November Budget that households can expect an average annual £150 reduction in energy bills from April 2026 by eliminating various green levies.
The Energy Company Obligation (ECO) is set to conclude in March 2026, while the financial burden on households for the Renewables Obligation (RO) scheme will be lessened. Most energy providers have committed to passing on the savings to consumers on fixed tariffs. Analysts at Cornwall Insight predict a drop in the price cap to £1,620 in April 2026, equating to a £138 reduction.