The regulator for England, Wales and Scotland is set to raise its price cap in the new year
Millions of Brits will face another energy bill increase from the new year as Ofgem recently announced its new price cap. The regulator previously raised this amount by 2% between October 1 and December 31, 2025, meaning typical dual-fuel households would pay around £1,755 annually.
Now, the cap for England, Wales and Scotland is set to bump up again to £1,758 between January 1 and March 31, 2026. While this represents a 0.2% increase from the most recent value, it’s £20 higher than the level between January and March 2025.
Last month, Tim Jarvis, Director General, Markets, at Ofgem, said: “While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets. The price cap helps protect households from overpaying for energy. But it’s only a safety net and there are practical ways that customers can pay less for their energy.
“Look at different tariffs and choose what’s right for you or change the way you pay to Direct Debit or smart pay-as-you-go. Prepayment remains the cheapest way to pay, and these customers are already saving around £47 on average.
“While wholesale energy costs are stabilising, they still make up the largest portion of our bills which leaves us open to volatile prices. That’s why we’re working with government and industry to boost clean energy and reduce our reliance on international sources we can’t control.”
Ofgem explains that its energy price cap is the ‘maximum amount’ that energy suppliers can charge you for each unit of energy and the ‘standard charge’ if you are on a standard variable tariff. While Ofgem has announced a general estimate for what ‘typical’ households might pay, the exact rate will vary based on factors like your location, the type of meter you have, and your payment method.
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Not everyone is affected by Ofgem’s price cap, but those on a default tariff who pay for electricity and gas through standard credit, Direct Debit, a prepayment meter, or an Economy 7 meter are generally affected.
Official guidance from Ofgem adds: “The actual amount you pay will depend on how much energy your household uses, where you live and the type of meter you have.
“You could pay less for your energy by changing your energy tariff or payment type. Find out if you can change or fix your tariff and how to switch energy supplier. Tell your energy supplier if you cannot pay your bills. They must help you if you ask. They could set up a repayment plan or provide you with emergency credit.”
Despite January’s price cap increase, the Autumn Budget recently saw the UK Government pledging to take ‘around £150 off energy bills on average from April’ in an effort to tackle cost-of-living issues.
The statement, released in November, reads: “Families across the UK are feeling the squeeze of still too high inflation. The Budget delivers a set of measures to remove around £150 of costs on average from household energy bills from April next year.
“Energy costs will be reduced by the ending of the Energy Company Obligation, which is currently funded through bills, and through the government funding 75% of the domestic cost of the legacy Renewables Obligation for three years. This is on top of extending the £150 Warm Home Discount to a further 3 million of the poorest households.”
Following the Budget, MoneySavingExpert founder Martin Lewis projected that energy price cap changes could lead to a 3.5p/kWh reduction in electricity and a 0.35p/kWh reduction in gas (including VAT) from April. This would mark a 13% cut in electricity and a 6% cut in gas from the January price cap.
Minister for Energy Consumers Martin McCluskey said: “We know the affordability crisis is the biggest issue facing this country, which is why we are taking £150 of costs off energy bills from April, in addition to the £150 Warm Home Discount that around 6 million households will receive this winter.
“The only way to bring down bills for good and protect our energy security is to get Britain off the rollercoaster of fossil fuels and onto clean, homegrown power we control.”
A spokesperson for Ofgem also said: “We support any move that reduces pressure energy bills, and welcome the measures announced by the Chancellor last month.
“We will continue working with government and suppliers on how these savings can be passed on to households on fixed deals.”
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