UK Energy Bills to Reach Three-Year High as Gas Prices Surge
Key Takeaways
- •Ofgem raised the household energy price cap by 4% for the period from October 1 to December 31, 2026.
- •The increase was linked to higher wholesale gas prices driven by the ongoing conflict in the Middle East.
- •A typical household paying by direct debit will see the cap rise from £1,663 to £1,723 a year.
- •Household energy bills had already risen by 13% in the previous quarter under the cap set in May.
- •Cornwall Insight had forecast a 4% increase before Ofgem made its announcement.
UK energy bills are set to reach a three-year high at the start of winter after higher gas prices linked to the Iran war prompted the energy regulator to raise the household price cap by 4% for October through December.
On Wednesday, the UK energy regulator Ofgem published its quarterly price cap decision and said the cap will rise by 4% for the period from October 1 to December 31, 2026.
The UK’s Energy Price Cap protects households from excessively high bills by limiting the amount energy suppliers can pass on to domestic customers. It sets the maximum price suppliers can charge per kilowatt hour of energy used.
Household energy bills had already increased by 13% between July 1 and September 30, 2026, under the price cap Ofgem set in May, following higher wholesale gas prices amid the Middle East crisis.
The latest rise had been widely anticipated by analysts. Last week, Cornwall Insight forecast that Ofgem would increase the cap by 4%.
In its announcement, Ofgem said: “This increase reflects higher wholesale gas prices as a result of the ongoing conflict in the Middle East, with volatile global gas markets remaining the dominant driver of price changes.”
“High international gas prices are continuing to drive energy costs in the UK,” said Neil Kenward, Ofgem’s Director General for Markets.
The current price cap for a typical household paying by direct debit for gas and electricity is £1,663, or $2,268.
Based on the energy use of a typical domestic household, the cap will rise by £60 a year, or £5 a month, from October to £1,723, or $2,350 for the average household using both electricity and gas if that level were sustained for a full year, Ofgem said.
The timing matters because the cap covers the months when households typically begin using more heating, so any change feeds directly into winter budgets even though the cap limits only the unit price and not total bills. With wholesale gas still setting the tone for UK energy costs, the next Ofgem update will be watched for whether market conditions have eased enough to slow further pressure on household bills.
By Tsvetana Paraskova for Oilprice.com
