Millions of households across Great Britain will face higher energy bills from January after Ofgem announced an unexpected rise in gas and electricity costs.
The energy regulator confirmed that the price cap for the January to March period will increase by 0.2 percent, raising the average annual dual-fuel bill from £1,755 to £1,758.
Ofgem noted that, after adjusting for inflation, the cap is still 2 percent lower than the same period in 2025, amounting to a difference of £37. The rise represents an additional 28 pence per month for an average household.
Tim Jarvis, Ofgem’s director general for markets, said: “While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets.” He added that the price cap acts as a safeguard, but “there are practical ways that customers can pay less for their energy.”
Despite slight market stability and a 4 percent drop in wholesale prices over the past three months, Ofgem said conditions remain “volatile”. The increase in the cap is partly due to updated assumptions about average household consumption and temporary cost adjustments linked to the warm home discount scheme.
This rise comes as a surprise, particularly after forecasts from Cornwall Insight suggested the cap would fall by 1 percent. The consultancy now expects a further increase in April, projecting the cap to reach £1,815.
Energy debt across the UK has grown sharply. Official data shows total household energy debt has risen from £2bn three years ago to £4.4bn this year. Citizens Advice reports that nearly seven million people, or around 10 percent of households in Great Britain, are currently in debt to their energy supplier.
The charity said the average debt held by those seeking help reached nearly £1,700 at the end of October, about £700 more than three years ago.
Adam Scorer, chief executive of National Energy Action, said bills “remain impossibly high for millions across the UK”. He warned that many people are rationing heating, reducing cooking, falling deeper into debt, and living in cold, damp homes.
Fuel poverty organisations are urging the chancellor, Rachel Reeves, to use the upcoming budget to address what they describe as crippling levels of household energy debt. They have called for environmental levies to be removed from bills and instead funded through general taxation.
Martin McCluskey, the minister for energy consumers, said the government recognises that energy bills are still too high and emphasised its aim to deliver long-term reductions through its clean power mission.
Simon Francis, from the End Fuel Poverty Coalition, said households are facing a fifth consecutive winter of the energy cost crisis. He argued that the country needs sustained investment in energy efficiency, structural reforms to reduce electricity prices, and a fairer tax approach that prioritises people over corporate profits.
