LONDON, November 21, 2025 – Millions of British households will face slightly higher energy bills in 2026 after the UK energy regulator Ofgem announced a 0.2% increase in the domestic energy price cap starting in January. The adjustment comes amid rising policy and network costs, despite a 4% decline in wholesale gas and electricity prices.

Breakdown of the Price Cap Increase

The small increase, approximately £3 annually for the average dual-fuel household, reflects new policy costs, including a contribution toward the Sizewell C nuclear plant, projected to cost £38 billion ($50 billion). Analysts had expected falling wholesale energy costs to slightly reduce bills, but growing network upgrades and social and environmental levies are increasingly influencing the total cost for consumers.

Craig Lowrey, principal consultant at Cornwall Insight, explained:
“Our forecast shows bills climbing again in April, but not because of wholesale energy – it’s due to non-energy costs that maintain and future-proof the system.”

Government Measures and Support for Vulnerable Households

The government faces pressure to take action to ease household energy bills, with measures expected in the upcoming budget. Martin McCluskey, Minister for Energy Consumers, emphasized that energy costs remain a major concern:
“We know that energy bills remain too high. The government has expanded support schemes to help vulnerable households this winter, and the transition to renewables will help reduce costs over the longer term.”

Expected Further Increases

Analysts predict a further rise in the energy price cap in April 2026, mainly due to levies required for network maintenance and upgrades, rather than wholesale energy costs. Cornwall Insight forecasts the cap could reach £1,814 per year for the average household if no intervention occurs.

Dhara Vyas, CEO of Energy UK, urged the government to act:
“The industry is keen to see measures to reduce bills, for example by removing some levies from electricity costs.”

The new price cap of £1,758 ($2,300) per year covers average household use of electricity and gas, marking a modest increase from the previous cap in effect from October to December 2025.

Conclusion

While the 0.2% rise in the energy price cap may appear minor, it underscores the growing influence of policy and network costs on UK households. With further increases expected in April 2026, government intervention and targeted support for vulnerable consumers remain critical as Britain transitions toward renewable and cleaner energy sources.