Millions of households across England, Scotland, and Wales will see their energy bills increase from the start of 2026, according to the latest announcement from the regulator Ofgem. The change, which takes effect on January 1, 2026, will add approximately £3 per year to the typical bill for a customer paying by direct debit.
What's Driving the Price Cap Increase?
This upcoming rise marks a shift from recent trends. Unlike previous bill hikes, which were largely fuelled by instability in the global wholesale gas market, this increase is attributed to growing government policy and network operating costs. Interestingly, Ofgem noted that wholesale energy prices have actually fallen by around 4% in recent months.
A specific new cost contributing to the rise is the Nuclear Regulated Asset Base (RAB) levy. This charge is designed to fund the construction of the new Sizewell C nuclear power station and will add roughly £1 per month to the average household's energy bill.
Understanding Your Bill and Available Support
It is crucial to understand how the Ofgem price cap works. The cap sets a maximum limit on the rate that suppliers can charge for each unit of gas and electricity you use, plus a standing charge. It does not cap your total bill. Therefore, households that consume more energy than the average 'typical' household will pay more than the quoted £1,758 annual figure, while those who use less will pay less.
For vulnerable customers, support remains in place. The government has confirmed the continuation of the Warm Home Discount scheme. This initiative provides a one-off £150 discount on electricity bills for eligible low-income households and pensioners during the winter.
Political Pledges and Criticism
The Labour government has responded to the announcement by reaffirming its flagship election pledge to reduce energy bills by £300 a year by 2030. A government spokesperson stated that building Britain into a 'clean energy superpower' is the only sustainable route to permanently lower bills and end dependence on fossil fuels.
However, the rise has drawn criticism from the opposition. Shadow Energy Secretary Claire Coutinho argued that the government's net-zero commitments are keeping bills artificially high. She claimed that despite falling gas prices, the extra costs needed to finance green energy targets are forcing consumer bills upwards.
The new price cap applies only to households in England, Scotland, and Wales. Energy regulation is a devolved matter in Northern Ireland, so households there are not affected by Ofgem's announcements.
