Household energy bills across Great Britain are expected to reach a three-year high this winter, with the government’s energy price cap forecast to rise by 4% from October. This increase would bring the annual equivalent bill to £1,729 for the last three months of 2026, according to analysis by energy consultancy Cornwall Insight.
The projected rise is primarily attributed to the impact of the Middle East war and the increased use of expensive gas in power plants during heatwaves across Europe. This forecast quarterly price cap would be the highest since July 2023.
The rising cost of gas is expected to more than offset Prime Minister Andy Burnham’s promise to cut VAT from household electricity bills, which was intended to provide “some breathing space” on living costs by reducing bills by an average of £45 a year. Craig Lowrey, principal consultant at Cornwall Insight, stated that this situation is a “stark reminder that our energy bills remain tied to events thousands of miles away.”
Analysts estimate that electricity rates will increase from 26.11p to 26.57p per kilowatt hour, and gas charges will rise from 7.33p to 7.90p for direct debit customers. Cornwall Insight also anticipates further bill increases in January, though this could change depending on developments in the Middle East.