Gas and electricity bills rise for millions of households – will energy prices fall in 2026?
Millions of households will pay 13% more for their energy this summer due to the July to September price cap. Where will prices go next?
Energy bills have risen for millions of UK households due to the conflict in the Middle East.
The Ofgem price cap has increased by 13% for the 1 July to 30 September period.
The hike comes following major disruption in the Strait of Hormuz, a key waterway through which around 20% of the world’s oil supply passes, due to conflict between the US and Iran.
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Tensions have eased between the two nations recently, but the Strait was effectively blocked for large periods after the war broke out on 28 February. This led to the wholesale cost of oil spiking, which has filtered into domestic energy bills.
How does Ofgem calculate the price cap?
Ofgem calculates the price cap by observing the average wholesale price of energy over a three-month period and then working out an average.
This average is then used to set the next price cap which is in place for three months. This means there is a delay between current wholesale prices and the price we pay for our energy.
Where are energy prices now?
As of 1 July, the energy price cap has risen to £1,862 per year, based on the average unit rate and standing charge for people paying for gas and electricity by Direct Debit in England, Scotland and Wales. This is up from £1,641 per year for the period between 1 April and 30 June.
However, as the price cap is a cap on unit rates and daily standing charges, you may pay more or less, depending on your energy usage. The price cap also varies by region.
Meanwhile the cap applies to households on standard variable tariffs and not the roughly 22 million that pay through fixed tariffs.
While the price cap has risen in July, households will be shielded from the worst of it as households tend to use less energy over the summer months. For example, most people turn their heating off over the warmer months, seeing average bills drop.
Where will energy prices go in autumn?
Energy regulator Ofgem will announce the price cap covering the October to December period by 26 August.
Cornwall Insight, an energy consultancy which makes future price cap predictions and is well-regarded for its forecasts, expects Ofgem to announce a 0.7% drop from £1,862 to £1,849 per year.
The consultancy said the 60-day ceasefire agreed between the US and Iran had helped stabilise wholesale gas markets, although prices remain high.
It warned people would still struggle from October as energy usage tends to rise from autumn and into the winter.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “October bills always hit harder than July’s because people are turning their heating on again, and this year that coincides with a difficult geopolitical backdrop.
“The new Prime Minister will face real pressure to act on support for vulnerable households, but the harder question is what comes after that, currently we are in a perpetual cycle of global shocks, high bills and short-term fixes.”
Energy firms EDF and British Gas also release energy price forecasts.
EDF predicts a 0.5% fall from £1,862 to £1,852 in the price cap in October, while British Gas expects a 0.7% rise from £1,862 to £1,875.
How to get help with paying your energy bills
If you’re struggling to afford your energy bills, you might be able to get a hardship grant through your supplier.
Octopus Energy customers can get help through Octo Assist while the British Gas Energy Trust lets some customers clear their arrears, for example those on prepayment meters owing between £50 and £1,700 and credit account customers owing between £250 and £1,700.
Alternatively, if you’re struggling with energy bill arrears, your energy firm might let you agree to a repayment plan. It will set an amount you must repay once weekly, fortnightly or monthly, covering what you owe plus an amount for your ongoing use.
You might be able to repay your debt directly through your benefits as well, via the Fuel Direct Scheme.
Additionally, some government schemes give select households money to cover the cost of energy bills.
Households in receipt of some means-tested benefits who use participating energy suppliers could get the Warm Home Discount. This is £150 of credit that is automatically applied towards your energy bill during the winter.
Meanwhile, pensioners with an income of £35,000 or less could be eligible for the Winter Fuel Payment, which is worth 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.
