Households across England, Scotland, and Wales are bracing for an increase in energy bills starting January 1, 2026, as Ofgem has announced a rise in the energy price cap. The cap will increase by 0.2%, translating to an additional 28p per month for the average dual-fuel household, bringing the annual bill to £1,758, up from £1,755. This unexpected rise comes despite earlier predictions of a potential decrease in energy costs. Experts had anticipated a drop of around £22 a year, but instead, households will see a modest increase of £3.36 annually. Ofgem's price cap sets the maximum amount energy suppliers can charge for each unit of energy and the standing charge for those on standard variable tariffs. Tim Jarvis, Ofgem's director general of markets, stated, "While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets. The price cap helps protect households from overpaying for energy. But it’s only a safety net, and there are practical ways that customers can pay less for their energy." The increase in standing charges is also notable, with electricity rising by 2% to 54.75p per day and gas by 3% to 35.09p per day. These changes are largely attributed to the costs associated with government policies, including the Warm Home Discount scheme, which aims to assist low-income households. Approximately 2.7 million additional families will qualify for a £150 discount this winter. Despite a 4% drop in wholesale energy prices over the past three months, Ofgem has indicated that non-wholesale costs are offsetting these reductions. The regulator has warned that the energy market remains volatile, and households should prepare for further increases in April, with predictions suggesting the cap could rise by an additional £57 to £1,815. Martin McCluskey, the UK Government’s minister for energy consumers, acknowledged the ongoing challenges, stating, "We know that energy bills remain too high. That is why we are taking immediate action, with millions more families receiving £150 off their bills through the expanded Warm Home Discount scheme this winter." Consumer advocates have expressed concern over the rising costs. Dame Clare Moriarty, chief executive of Citizens Advice, remarked that the increase will lead to another difficult winter for many households already struggling with debt. She urged the government to consider shifting some policy costs into general taxation to alleviate the burden on electricity bills. As the energy landscape continues to evolve, Ofgem is encouraging consumers to explore different tariffs and payment methods, such as switching to direct debit or fixed-rate deals, which could offer savings amid the rising costs. In summary, the energy price cap increase signals a challenging period ahead for UK households, with rising bills and ongoing market volatility prompting calls for government intervention and consumer action.