The price cap will hit £1,928 from October, but Ofgem’s director general now says that is not a peak, it is a plateau. In a stark briefing to suppliers including British Gas, Octopus and EDF, the regulator’s top official warned that wholesale gas costs will remain elevated for years, not months. The era of cheap energy is over.
As reported by Cambridge News, the prediction landed like a sledgehammer on household budgets already reeling from two years of above-inflation rises. For the typical 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity, the annual bill has more than doubled since 2020. The message from the regulator is blunt: do not expect it to fall back.
What it costs, and what it means for your bill
Ofgem’s own modelling, seen by industry analysts, suggests wholesale gas prices will stay 60–80% above pre-pandemic averages through 2027. That translates to a standing charge of roughly 60p a day for electricity and 30p for gas, before you use anything. On a variable tariff, the typical household will pay around £1,900 a year for the next three years, according to forecasts from Cornwall Insight cited by several outlets.
The catch is that the price cap adjusts quarterly, so bills can still rise or fall by a few hundred pounds. But the floor is now much higher. Households on fixed deals may find limited options above £2,000. The government’s Energy Price Guarantee, which capped bills at £2,500 last winter, has been replaced by the less generous cap. No new broad subsidy is planned.
Who wins, and who loses
Suppliers like Octopus and EDF have been lobbying the regulator for more flexibility to offer fixed tariffs. Some have launched 12-month fixes at £2,100–£2,300, but these are not cheap. The losers are clear: the 6 million UK households in fuel poverty, defined as spending more than 10% of income on energy. For them, every £100 rise is a choice between heating and eating.
Yet for homeowners with modest savings, the calculus shifts. Every pound spent on insulation, draught-proofing, or a heat pump now avoids £3–£5 of future energy costs at current prices, according to Energy Saving Trust estimates. The Boiler Upgrade Scheme still offers £7,500 for a heat pump. The Great British Insulation Scheme provides loft and cavity wall grants for low-income households. These are not nice-to-haves; they are the only hedge against a permanently higher cost base.
What to do, and by when
The first action is free: switch to a smart meter and time-of-use tariff if your supplier offers one. Octopus Agile and EDF’s GoElectric tariffs can cut costs for households that shift washing and charging to off-peak hours. The second step is a fabric-first audit. Loft insulation costs roughly £300–£500 and saves £200–£300 a year. Cavity wall insulation runs £500–£1,000 and saves a similar amount. Both pay back in under three years at current prices.
For those considering solar panels, a typical 4 kW system costs £6,000–£8,000 and saves £500–£800 a year on bills, plus the Smart Export Guarantee pays for surplus power. The payback period has shrunk from 10 years to 6–7 as grid prices rose. Heat pumps remain the bigger upfront cost (£7,000–£13,000 after grant) but cut gas use by 60–70% and improve EPC ratings from D to B or A.
Ofgem’s grim prediction is not a reason to despair. It is a reason to act. Households that invest in efficiency this year will lock in savings for the next decade, while those who wait will pay the price of inaction, month after month, year after year.
Frequently Asked Questions
Ofgem's director general has said a return to pre-pandemic prices is unlikely in the foreseeable future. Wholesale gas costs are structurally higher due to global demand and supply constraints. Most analysts expect prices to stay 60–80% above 2020 levels until at least 2027.
Loft insulation and draught-proofing offer the fastest payback, typically £300–£500 upfront, saving £200–£300 a year. Switching to a time-of-use tariff and using appliances off-peak also cuts costs without any capital outlay. Check the Great British Insulation Scheme for grants.
