Energy bills are increasing slightly starting today as the new Ofgem price cap takes effect. For households paying by direct debit, the annual energy bill will rise from £1,755 to £1,758 under the new cap, which sets limits on gas and electricity unit rates and standing charges.
The price cap does not impose a total cap on energy costs, meaning bills still vary based on usage for those not on fixed energy tariffs. The price cap for pre-payment meter users is increasing from £1,707 to £1,711 annually, while those paying upon receipt of the bill will see an increase from £1,890 to £1,894.
Updated every three months, the price cap is set to change again in April 2026. Despite being 2% or £37 lower than earlier this year, households are advised by consumer group Which? to consider switching to fixed tariffs to save money.
According to Which? energy editor Emily Seymour, with the upcoming slight increase in the energy price cap during the colder months, households should explore deals below the cap value for potential savings. Ofgem attributes the latest price cap increase to government policy costs and operational expenses, including funding for projects like Sizewell C nuclear plant and the Warm Home Discount scheme.
In the November Budget, Chancellor Rachel Reeves announced an average £150 yearly reduction in energy bills for households from April 2026 by eliminating certain green levies. With the Energy Company Obligation ending in March 2026 and reduced contributions to the Renewables Obligation scheme, most energy providers are expected to pass on savings to fixed tariff customers.
Energy analysts predict the price cap to decrease to £1,620 in April 2026, a £138 reduction.