Energy bills are set to rise slightly starting today with the implementation of the new Ofgem price cap. Households paying by direct debit can expect their annual energy bill to go up from £1,755 to £1,758 due to the price cap adjustments on gas and electricity unit rates and standing charges.
The price cap doesn’t impose a total limit on energy costs, meaning actual bills still depend on individual usage unless on a fixed energy tariff. For those using pre-payment meters, the price cap is increasing from £1,707 to £1,711 annually, while those paying upon receipt of the bill will see their yearly charge rise from £1,890 to £1,894.
This price cap revision is part of a quarterly update and will see another change in April 2026. Despite being 2% or £37 lower than the previous year, households continue to face higher energy expenses. Consumer advocate Which? recommends considering switching to a fixed tariff to save money.
Ofgem attributes the latest price cap increase to government policy expenses and operational costs such as supporting projects like Sizewell C nuclear and the Warm Home Discount scheme. Chancellor Rachel Reeves announced in the November Budget that households can anticipate an average annual saving of £150 from April 2026 by removing certain green levies from energy bills.
The Energy Company Obligation (ECO) will conclude in March 2026, and contributions towards the Renewables Obligation (RO) scheme will be reduced. Most energy providers assure that fixed tariff customers will benefit from the cost reductions. Analysts predict the price cap may drop to £1,620 in April 2026, resulting in potential savings of £138.