Energy bills are set to increase slightly starting today with the implementation of the new Ofgem price cap. For households using direct debit payment methods, the annual energy bill will rise from £1,755 to £1,758. The price cap governs the maximum charges for gas and electricity unit rates and standing charges.

Notably, the price cap does not impose a total limit on energy costs, as they are influenced by individual consumption levels. Customers not on fixed energy tariffs will fall under the price cap guidelines.

For those using pre-payment meters, the price cap will increase from £1,707 to £1,711 per year, and for individuals paying upon receipt of the bill, the yearly charge will go up from £1,890 to £1,894.

The price cap undergoes updates every three months, with the next revision scheduled for April 2026. Despite the current increase, the new price cap represents a 2% or £37 reduction compared to previous periods.

Consumer advocacy group Which? advises consumers to explore fixed tariff options to potentially save money. Ofgem attributes the price cap adjustment to government policy costs and operational expenses, such as supporting 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 energy bill reduction of £150 from April 2026 due to the removal of certain green levies. The Energy Company Obligation will conclude in March 2026, and contributions to the Renewables Obligation scheme will decrease.

Most energy providers assure that savings resulting from these changes will be passed on to customers on fixed tariffs. Energy market analysts forecast a further decrease in the price cap to £1,620 in April 2026, translating to a £138 reduction for consumers.