Will gas and electricity bills fall in 2026? Energy price forecast
Energy bills are set to drop from April when Ofgem’s latest energy price cap kicks in. How much will you pay for energy going forward, and how will the war in the Middle East affect your bill?
Sam Walker
Energy bills for most households in England, Scotland and Wales are set to fall by 7%, equivalent to £117 a year, from 1 April when the latest energy price cap comes into play.
Millions of households will see some reduction in how much they need to shell out for energy after the government axed some green levies worth £150 from household bills in the Autumn Budget.
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Why are energy bills set to come down?
Energy bills will fall on 1 April after the government announced it would cut energy bills in the 2025 Autumn Budget.
Certain green levies are being removed from household bills from April onwards as the vast majority of the costs associated will be shifted into general taxation.
With these costs removed from energy bills, the government estimates the average household will be £150 better off per year.
However, Ofgem said savings will be partially offset by an increase in the cost of running the UK’s energy infrastructure.
Overall, the April price cap will be £117 lower than the January cap thanks to the changes.
The government says the majority of households in the UK will benefit from the £150 bill drop, with the savings applying to all tariff types, including: variable tariffs, fixed tariffs, tracker tariffs and time-of-use tariffs.
Energy consultancy Cornwall Insight said the price cap would have risen in April by as much as £57 had the government not intervened.
While this price drop will be welcomed by households, it is only a small saving. The average energy bill remains above £1,500 a year – much more than was the norm before the 2022 energy crisis.
Where will energy prices go in 2026?
Ofgem will confirm the next price cap, covering the July to September period, by 27 May.
Following the US and Israeli strikes on Iran, and the subsequent disruption to the global energy supply chain, forecasts for the July price cap are now far more uncertain.
Consultants at Cornwall Insight, which is well-regarded for the accuracy of its price cap predictions, predict the July price cap could be around 11% higher than the April level due to the war in the Middle East.
That would take the average typical bill for a dual-fuel household paying by direct debit to £1,826 per year. That is £185 higher than in April.
Before the current conflict, Cornwall Insight expected the July price cap to rise slightly to £1,645 from £1,641 in April.
The revision comes as wholesale gas prices have remained high since 28 February, when the first strikes were fired on Iran by the US and Israel.
This immediate price rise reflects the overall surge in global gas markets, with the UK being particularly exposed as it is a net importer of fuel used for household energy, the consultancy said.
However, such a sharp rise may not come to fruition, depending on the length of the conflict in the Middle East, and the scale of disruption to the UK’s energy supply.
Cornwall Insight said Ofgem will base the final July price cap figure on average wholesale prices over a three-month period.
That means if gas prices stay elevated for a longer period of time, the price cap will likely increase. Conversely, if prices return to normal quickly, the impact of the war on energy bills may be lessened.
If Cornwall Insight's prediction turns out to be correct, the rise will be significant, but the damage will be far smaller than the shock triggered by Russia’s invasion of Ukraine in 2022.
Craig Lowrey, principal consultant at Cornwall Insight, said: “This latest forecast puts the role of wholesale markets firmly back in the spotlight and illustrates how exposed UK households remain to international market movements.
“While the rise is eye‑catching, any immediate concern should be tempered. We are still early in the assessment period for the July cap, and what happens in the energy markets over the next three months will be the key factor, rather than this spike alone.”
Other forecasters also expect the price cap to rise this summer following the war in the Middle East.
EDF Energy thinks the price cap will rise £217 on 1 July, from £1,641 to £1,858. This prediction comes in £112 higher than predictions before the conflict.
It then expects prices to rise again in October, to £1,919, and start 2027 at £1,928.
Meanwhile, British Gas expects the cap to rise by £234 in July to £1,875, to £1,915 in October, and £1,930 in January 2027.
What are the new energy unit prices?
Energy bills will fall by 7% from 1 April. It means the average household on a dual-fuel tariff (which covers gas and electricity) paying by direct debit will pay £1,641 a year during Q2, down from £1,758 a year currently.
The price cap, which affects around 33 million households, is a limit on unit prices, not your total bills, so your actual bill will be determined by the amount of energy you use.
The current price cap energy unit prices and those for April to June 2026 can be found below:
Current energy price cap per unit and standing charge 1 January to 31 March 2026 | New energy price cap per unit and standing charge from 1 April to 30 June | |
Electricity | 27.69 pence per kWh 54.75 pence daily standing charge | 24.67 pence per kWh 57.21 pence daily standing charge |
Gas | 5.93 pence per kWh 35.09 pence daily standing charge | 5.74 pence per kWh 29.09 pence daily standing charge |
Source: Ofgem
How to get help with paying your energy bills
If you’re struggling to afford your energy bills, your energy supplier may offer support with hardship grants. Octopus Energy has Octo Assist and British Gas has the British Gas Energy Trust.
You may be able to get a repayment holiday. This is where you ask your supplier to pause your repayments for a short amount of time to give you some breathing space.
Another option is to agree to an affordable payment plan. You will pay fixed amounts over a set period of time, which will cover what you owe plus an amount for your current use.
If you are on benefits, you might be able to repay your debt directly from your benefits through the Fuel Direct Scheme.
According to Citizens Advice, the Fuel Direct Scheme can be a good option if you can’t agree on a plan to pay back your debt, and it’s usually better than getting a prepayment meter.
Additionally, some government schemes give some households money towards paying their energy bills.
The Warm Home Discount is offered to households in receipt of some means-tested benefits who use participating energy suppliers and provides £150 of credit that is automatically paid towards your energy bill.
Meanwhile, if you are a pensioner with an income of £35,000 or less, you will be eligible for the Winter Fuel Payment, which provides retirees with up to £300 each winter.
To help you keep energy bills low, we have gathered some top tips in our article looking at 14 ways to reduce your energy costs.
Where will heating oil prices go after recent eye-watering price hikes?
Some households in Britain are facing the prospect of a 114% rise to the cost of heating their homes after the Iran war has led to a surge in the price of heating oil.
Disruptions to the supply of oil, which heating oil is derived from, have meant the price of the fuel increased from around 60p per litre on 28 February to more than £1.28 per litre on 17 March.
Households reliant on heating oil are not protected by a regulator in the same way mains customers are protected by the price cap, making them more sensitive to market forces.
For this reason it is especially difficult to predict where the price of heating oil will go in the future as no cap is agreed-upon in advance.
This being said, one way to get a rough idea of where the price of heating oil may go in the future is by looking at where the wider oil market will go.
The price of oil soared following US and Israeli strikes on Iran on 28 February, and currently sits at around $100 per barrel of Brent Crude.
Where prices go next will largely depend on how long the Iran war will go on for, and how safely oil can be transported through the Middle East, but most forecasts expect prices to remain higher than before the conflict for the remainder of 2026.
