UK households will pay slightly higher energy bills in the first quarter of 2026 after energy market regulator Ofgem on Friday raised the Energy Price Cap by 0.2%, against expectations of a 1% drop.
The UK has a so-called Energy Price Cap in place, which protects households from excessively high bills by capping the price that energy utility providers can pass on to them.
Energy bills in Britain have declined from the record highs in 2022 and 2023, but they are still about 35% higher compared to before the Russian invasion of Ukraine and the energy crisis that followed.
On Friday, Ofgem announced a 0.2% rise of the energy price cap for the period January to March 2026. This change would mean a slight increase in bills for a typical UK household, and year on year when adjusted for inflation the new cap is 2%, or $48 (£37), lower than the same period in 2025, the regulator said.
The slight increase of the price cap is driven by government policy costs and operating costs. This includes funding government’s Sizewell C nuclear project which will bring more clean power, Ofgem noted.
The cap was expected to drop by 1%, according to Cornwall Insight’s prediction from earlier this week.
“While wholesale energy costs are stabilising, they still make up the largest portion of our bills which leaves us open to volatile prices,” said Tim Jarvis, Director General, Markets, at Ofgem.
“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.”
According to Ofgem, wholesale prices – which make up the largest portion of the bill – are currently stable and have fallen by 4% over the past three months.
“However, unpredictable global events leave us open to volatility and prices could change,” the regulator said.
The Labor government wants to build infrastructure to accommodate more renewable energy and remove the volatility of fossil fuels from the bills, Energy Minister Michael Shanks told Sky News.
“We obviously hope that that will happen as quickly as possible, but there’s no shortcut to this, and there’s not an easy solution to building the clean power system that brings down bills,” Shanks added.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
