UK Energy Bills to Hit Three-Year High as Gas Prices Surge

UK energy bills are set for a three-year high at the beginning of the winter, as higher gas prices due to the Iran war have prompted the energy regulator to raise the energy price cap on household costs by 4% for October through December.

The UK energy regulator Ofgem on Wednesday published its quarterly energy price cap decision, announcing a 4% increase in the cap for the period between October 1 and December 31, 2026.

The UK has a so-called Energy Price Cap in place, which protects households from excessively high bills by capping the price that energy utility providers can pass on to them. The price cap is a limit on what suppliers can charge domestic consumers per kilowatt hour of energy used.

UK energy bills have already jumped by 13% between July 1 and September 30, 2026, under the price cap that Ofgem set in May, as a result of higher wholesale gas prices amid the Middle East crisis.

The latest increase in the price cap was widely expected by analysts, with Cornwall Insight predicting last week that Ofgem would raise the energy price cap by 4%.

In its announcement on Wednesday, the UK energy regulator said that “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, from October, the price cap will rise by £60 per year (or £5 per month) to £1,723, or $2,350 for the average household using both electricity and gas if this level were sustained for a year, Ofgem said.    

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com