Energy price cap increases by 0.2% – industry reaction

Energy regulator Ofgem has announced a 0.2% rise of the energy price cap for the period covering January to March 2026.

Thd change amounts to a small increase of around 28 pence a month for the average dual fuel household. Year on year when adjusted for inflation the new cap is 2% or £37 lower than the same period in 2025.

The price cap refers to the default tariff applied when a customer is not on a fixed-rate tariff. It sets a maximum rate per unit and standing charge that can be billed to customers for their energy use. For an average household paying by Direct Debit for gas and electricity, the overall bill will be £1,758 per year.

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.”

Peter Tutton, Director of Policy, Research and Public Affairs at StepChange, said “These small fluctuations in the energy price cap, unfortunately, aren’t something households can rely on. Energy prices remain stubbornly high when compared to pre-cost of living crisis levels. The average energy debt of people seeking debt advice from StepChange has increased by 34% over the last two years, now averaging £2,762 per client.

“We welcome Ofgem’s long-awaited action on energy debt through the introduction of its Debt Relief Scheme – but this won’t be enough to tackle the scale of the affordability challenge. With the Budget just a few days away, it’s vital the Government considers targeted support for households struggling with persistently high energy bills, which is a key driver of the debt problems we see among StepChange clients.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, said “This small rise in the price cap will mean another tough winter for the seven million people living in households in debt to their energy supplier. Our advisers are hearing from those at the sharpest end of this crisis: families that can only afford to heat one room and people wearing gloves inside to stay warm.

“With bills still drastically higher than before the energy crisis, and due to rise again from April, it’s high time for decisions about the longer term. In next week’s Budget, the government must cut electricity bills by shifting some policy costs into general taxation, or spreading them more evenly between gas and electricity. This could bring electricity bills down by hundreds of pounds, especially for those with the most stretched household budgets.

“The government must also use the Warm Homes Plan to make substandard homes easier and cheaper to heat – rowing back on this manifesto promise would trap people in cold, leaky homes for years to come. And to help those struggling most, we must see a strengthening of targeted support like the Warm Home Discount.”

Energy UK’s Chief Executive Dhara Vyas said “While only a small rise, it means that bills are still too high for too many customers. Next week’s Budget will hopefully include measures to bring down bills and provide some respite for customers, as well as start to address the root causes of the record levels of customer debt. The urgency of this feels even more stark given the drop in temperatures across the country, which serves as a timely reminder of the importance of being able to heat homes to give people warmth, comfort and safety.

“The industry is keen to see the Government take action to reduce bills, in a way that brings the most widespread and lasting benefits for customers, for example by removing some levies from electricity costs. While any reduction in bills would be welcome, it should not be at the expense of the long-term interests of customers – or indeed our economy – or in place of a proper strategy to tackle affordability and debt through targeted support.”