Energy Bills Set for New Year Increase
Millions of households across Britain face higher energy costs from the start of 2026, after the energy regulator confirmed an unexpected rise in its price cap.
Ofgem has announced that its energy price cap will increase by 0.2% from January 1st, marking a reversal from recent predictions that bills would fall.
What the Numbers Mean for Households
The adjustment means the average dual-fuel household in England, Scotland and Wales will see their monthly energy bills rise by approximately 28p per month.
This translates to an annual increase of around £3, pushing the typical bill for those on default tariffs from £1,755 to £1,758 per year.
The announcement comes as a surprise to energy market observers, who had anticipated a decrease in bills. Leading analysts at Cornwall Insight had previously forecast a 1% reduction in the price cap due to declining wholesale energy costs.
Regulator Explains Volatile Market Conditions
Ofgem acknowledged that wholesale prices have indeed fallen by 4% over the past three months and are currently stable, but emphasised that market conditions remain "volatile."
Tim Jarvis, Ofgem's Director General of Markets, commented: "While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets."
He further explained the ongoing challenge facing consumers: "While wholesale energy costs are stabilising, they still make up the largest portion of our bills which leaves us open to volatile prices."
Jarvis also reminded households that the price cap serves as a "safety net" against overpaying, but encouraged customers to explore practical ways to reduce their energy costs beyond the protected rate.
