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UK Energy Regulator Ofgem Raises Household Energy Bill Cap

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Great Britain's energy regulator Ofgem on Wednesday said a cap on the price utilities can charge households for power and gas will rise by 4% from Oct. 1, due to the higher wholesale price of gas this year, linked to conflict in the Middle East.

The average annual household energy bill will thus increase to 1,723 British pounds ($2,349), barring any further increases in the cap, revised every three months. About a third of households will dodge the increase due to fixed tariff contracts, it said.

Ofgem's statement said the conflict in the Middle East between the US and Iran was the main driver of the increase, due to resulting volatility in global gas prices. Iit said prices were 52% below their peak in 2022 following Russia's invasion of Ukraine when yearly bills surged to a capped 2,500 pounds.

The increase means that the government's removal of value-added tax on household electricity bills will no longer result in an overall reduction in energy bills, but rather help to hold them steady, Ofgem said, offsetting most of the 8% rise in the gas price cap.

Bloomberg said that UK inflation data published last week, indicating a 2.9% in consumer prices versus July 2025, was largely driven by higher energy costs.

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