Will gas and electricity bills fall in 2026? Energy price forecast
Billpayers in the UK have seen energy bills rise by around £3 a year after the January price cap was introduced. Where will prices go next?
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Twice daily
MoneyWeek
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Four times a week
Look After My Bills
Sign up to our free money-saving newsletter, filled with the latest news and expert advice to help you find the best tips and deals for managing your bills. Start saving today!
Energy bills rose slightly on 1 January 2026 – the average household on the price cap is now paying 0.2% more for their energy than they did in the last quarter of 2025.
Under the current price cap, the average annual energy bill for the typical household on a variable energy tariff paying by direct debit is £1,758 until 31 March. This is £3 more than under the previous price cap.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The aim of the price cap, set by the regulator Ofgem, is to ensure households aren’t overcharged for gas and electricity while reflecting higher wholesale costs being paid by suppliers.
Where are energy bills now?
Energy bills rose marginally in the first quarter of 2026. It means the average household on a default dual-fuel tariff (which covers gas and electricity) will pay £1,758 a year for their energy, around 28p extra per month when compared to the final quarter of 2025.
The January to March 2026 price cap can be found below:
| Header Cell - Column 0 | Energy price cap per unit and standing charge 1 January to 31 March 2026 |
|---|---|
Electricity | 27.69 pence per kWh 54.75 pence daily standing charge |
Gas | 5.93 pence per kWh 35.09 pence daily standing charge |
Source: Ofgem
The small rise came as new charges have started to be included within the cap, pushing up household prices despite the cost of wholesale energy falling. The most significant of these is the new Regulated Asset Base (RAB).
The RAB is designed to raise money to support investment in new nuclear power stations by spreading the costs of construction and operation across consumer bills.
The main nuclear project this is currently funding is the Sizewell C project in Suffolk, which the government has committed £14 billion to. Ministers say, once built, the site will produce enough electricity to power roughly six million homes and protect households from volatility in the wholesale gas market.
Where will energy prices go in 2026?
While the energy price cap was broadly static between the final quarter of 2025 and the first three months of 2026, a much bigger shake-up is to be expected in April.
In the Autumn Budget, chancellor Rachel Reeves said average household energy bills will be cut by around £150 a year after she announced some green levies will be axed in April 2026.
The chancellor said 75% of the costs of the Renewables Obligation, which places an obligation on suppliers to buy renewable energy, will be taken off household energy bills for three years.
She also announced the blighted Energy Company Obligation (ECO) scheme, which requires some suppliers to help low-income households increase their energy efficiency by installing energy-saving measures, will not be extended past March 2026.
By removing the green levies, the chancellor expects to shed around £150 from annual household energy bills. Energy consultancy Cornwall Insight estimates savings to be slightly less, at £145.
Before the measures were announced, forecasters were expecting a steep increase in the price cap in April 2026, possibly as much as £57 according to Cornwall Insight, so the £150 drop in bills will come as a positive to households.
The April price cap will be announced by 25 February.
Cornwall Insight, which is well-regarded for the accuracy of its price cap predictions, now forecasts the April price cap to be £1,641 per year for a typical dual fuel consumer, down £117 from the January cap.
If the prediction comes true it would represent a fall of around 7%, mainly due to the energy bill cut announced in the Budget.
The consultancy says increases in the charges associated with the operation and maintenance of the UK’s energy networks have offset part of savings expected from the government’s bill cut.
The latest forecast is also £21 higher than Cornwall Insight’s previous April price cap prediction that it made on 2 January, which expected the next cap to be £1,620 per year.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Any reduction in bills is positive, easing pressure at a time when affordability really matters. It’s the drop in policy costs, as a result of Government interventions, that is doing most of the heavy lifting and, while wholesale costs have come back into the headlines in recent weeks, the impact on April’s bills is minimal.
“The real test will be keeping those savings going. That won’t be easy as the UK continues to upgrade its networks and infrastructure. That investment is needed if we want an energy system that is more secure and resilient, after the consequences of exposure to global energy markets were made all too apparent in recent years. However, there needs to be an open conversation about the fact that such a transition will not be cost‑free.”
As for the rest of 2026, Cornwall Insight currently predicts the price cap will remain relatively steady throughout the year, only forecasting a small rise in July.
What do other forecasters say?
EDF Energy has predicted the annual price cap will fall by £118 in April to £1,640, as the removal of environmental levies will offset the rise in bills previously expected.
The firm then expects prices to fall in the summer, dropping to £1,602 a year in Q3, before rising marginally to £1,605 in the final quarter of 2026.
You should take these predictions with a pinch of salt, however, as it is very difficult to accurately forecast where energy prices will go so far in the future, particularly because the wholesale energy market can be so volatile.
Period | Price cap prediction (per year) | Confidence level |
Q1 2026 | £1,758 | Confirmed |
Q2 2026 | £1,640 | Low |
Q3 2026 | £1,602 | Very Low |
Q4 2026 | £1,605 | Very Low |
Q1 2027 | £1,625 | Very Low |
Source: EDF, accurate as of 18 February
British Gas also publishes price cap forecasts. The firm also thinks energy prices will fall in April thanks to the government’s bill cut, expecting the price cap to fall to £1,635 a year in the second quarter of 2026, slightly less than EDF and Cornwall Insight expect.
They think bills will dip by a further £25 in Q3, anticipating a fall to £1,610, and remain at that level until the end of the year.
As with the previous set of predictions, you should take these with a pinch of salt.
Period | Price cap prediction (per year) | Confidence level |
Q1 2026 | £1,758 | Confirmed |
Q2 2026 | £1,635 | Low |
Q3 2026 | £1,610 | Very Low |
Q4 2026 | £1,605 | Very Low |
Q1 2027 | £1,615 | Very Low |
Source: British Gas, accurate as of 18 February
Will customers on fixed energy tariffs get £150 off their energy in April?
Customers on variable tariffs will have welcomed the government’s announcement that the axing of green levies will reduce their energy bills by around £150 from April. But some uncertainty remains for those who decided to fix their energy bills.
If you fix your energy bills, you enter into a contract with your energy supplier that you will pay a certain amount for your energy for a set period of time, no matter if prices rise or fall.
It means customers on fixed tariffs could potentially not feel the benefits of the cut, depending on the decisions of their energy supplier.
Energy secretary Ed Miliband has told suppliers to pass the savings on to customers with a fixed tariff, regardless of the level they initially agreed to fix at.
Thankfully, all major suppliers, including British Gas, E.on, EDF, Octopus, Ovo, and many more have confirmed that they will pass the savings on to fixed rate customers.
If you are on a fixed deal and want to know whether the £150 cut will be passed on to your bill, you should contact your supplier and ask them directly for confirmation.
Where are prices going to go in the longer term?
Energy bills are expected to rise over the next five years to fund a £28 billion investment in the energy network.
Energy firms were given the green light to upgrade power and gas grids in December 2025, but households will have to pay for it through their bills.
Ofgem said household electricity and gas bills will rise by a net of £30 per year by 2031. This factors in any savings that will be made by consumers due to the upgrades.
The regulator said it would hold firms to account for delivering any upgrades on time and on budget.
What do rising energy prices mean for you?
As the energy price cap rose on 1 January, households on a variable tariff will find they are paying slightly more for their energy than they did between October and December.
While Ofgem estimates the average annual bill for the first quarter of 2026 is £1,758, some households will pay more than this and some will pay less.
This is because unit costs and standing charges are capped, not energy bills. Households that use more gas and/or electricity could end up paying significantly more while ones that restrict their energy usage will pay less.
The below table summarises how unit costs and standing charges have changed over the course of this year. It also has the latest forecast from Cornwall Insight for April, which includes the expected savings from the chancellor’s green levy cut.
| Row 0 - Cell 0 | January 2026 price cap | April 2026 (Cornwall Insight prediction) |
Electricity unit cost (per kWh) | 27.69p | 23.64p |
Electricity standing charge (daily) | 54.75p | 0.64p |
Gas unit cost (per kWh) | 5.93p | 5.52p |
Gas standing charge (daily) | 35.09p | 0.36p |
Typical annual household bill | £1,758 | £1,640.74 |
Source: Ofgem (confirmed figures) and Cornwall Insight (April forecast). Typical annual bill based on customers paying by direct debit. Latest Cornwall Insight predictions as of 18 February.
Should I fix my energy?
There are a number of fixed energy deals on the market currently charging well below the current price cap, meaning there are some savings to be had.
However, with energy bills falling by around £150 from April, these savings could be partially offset if your supplier does not pass the savings onto you. You should check whether the supplier you are considering has confirmed they will pass the savings on to you before agreeing to a tariff.
Fixed energy tariffs don’t fix what you pay, just the rate for each unit of gas and electricity for a fixed amount of time, usually 12 months. If you prefer certainty over what you’re paying, a fixed deal could be for you.
For more information on whether or not you should fix your energy bills, read our article on if you should switch to a fixed energy tariff.
How to keep energy bills low
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.
If you're interested in the best ways to improve your energy efficiency and reduce costs, we explore radiators versus electric heaters, heated airers versus tumble dryers, and wood burning stoves versus central heating in separate articles.
How to get help with paying your energy bills
If you’re struggling to afford your energy bills, don’t bury your head in the sand and build up large debts.
Your energy supplier may offer support, for example, some suppliers have 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.
What’s happening with standing charges?
Ofgem is looking to shake up the energy tariffs available to bill payers who want lower standing charges.
Since January, consumers have been given the choice to use an energy tariff with lower standing charges, with the trade-off of paying higher unit rates for their energy.
The energy regulator has warned the change is unlikely to bring about overall savings as the costs are simply being moved to a different part of the bill.
-
Should you buy an active ETF?ETFs are often mischaracterised as passive products, but they can be a convenient way to add active management to your portfolio
-
Power up your pension before 5 April – easy ways to save before the tax year endWith the end of the tax year looming, pension savers currently have a window to review and maximise what’s going into their retirement funds – we look at how
