Published: June 2026 | Reading time: 7 minutes
Ofgem has confirmed that the energy price cap will rise by 13% from 1 July 2026, taking the typical annual household bill from £1,641 to £1,862. Wholesale gas prices have surged by 28% over the past three months, driven by the ongoing military conflict in the Middle East, and a further increase is already forecast for October.
For UK businesses, the picture is considerably worse, because there is no energy price cap for commercial customers and there has not been one since government support schemes ended in March 2024.
What Ofgem announced
On 27 May 2026, Ofgem confirmed a 13% increase in the energy price cap covering 1 July to 30 September 2026. From July, the average domestic electricity price will rise to 26.1p per kWh and the average gas price will jump to 7.3p per kWh.
The increase is directly linked to the conflict in the Middle East, which has disrupted global oil and gas supply routes and sent wholesale prices sharply upward. Ofgem CEO Tim Jarvis stated that today’s price change reflects continued volatility in global energy markets and that higher wholesale gas prices, driven by ongoing conflict, are impacting the price we all pay for energy.
Despite this increase, Ofgem points out that prices remain 54% lower than the peak of the energy crisis in 2022 when the government stepped in to cap bills at £2,500. That comparison, while technically accurate, offers little comfort to businesses that are already operating on tight margins after four years of elevated energy costs.
Why businesses are more exposed than households
The domestic price cap is designed to protect household consumers from the worst of wholesale market volatility. It sets a maximum rate per unit that energy suppliers can charge, reviewed every quarter. Roughly 33 million household accounts sit under this protection.
Businesses have no such safety net. Commercial energy prices are determined entirely by the contract a business has negotiated with its supplier and by the wholesale market conditions at the time that contract was agreed. When wholesale prices spike, the impact lands directly on the next contract renewal.
This matters because all government business energy support schemes have now ended. The Energy Bill Relief Scheme and the Energy Bills Discount Scheme both closed in March 2024, and no replacement programmes are currently planned. For UK businesses, the cost of energy is now entirely a matter of commercial exposure and operational efficiency.
As of May 2026, the average business electricity unit rate in the UK sits between 24.7p and 25.7p per kWh depending on business size, with micro businesses paying closer to 29p per kWh. Larger half hourly metered sites may negotiate rates between 15p and 20p per kWh, but non commodity charges, which include network costs, policy levies, and renewable obligation payments, continue to push the total cost upward regardless of the wholesale rate.
The numbers behind the headlines
Several figures from the latest data paint a clear picture of the pressure facing UK businesses right now.
That last point is worth sitting with. Even when wholesale prices stabilise or fall, the structural costs built into every business electricity bill continue to climb. Transmission network charges, capacity market levies, the new Nuclear RAB charge for Sizewell C construction, and rising distribution costs all add weight to the bill regardless of what is happening on the global wholesale market.
Gas is rising faster than electricity, and that tells a story
One of the most significant details in the Ofgem announcement is the difference in how gas and electricity prices are moving. Gas bills are rising by 24% under the new cap and electricity bills are rising by just 5%.
This gap is not a coincidence, it reflects a fundamental shift in the UK energy system. As the share of renewable generation on the grid continues to grow, electricity prices are becoming less dependent on the cost of gas. In April 2026, the UK grid ran on 98.8% zero carbon energy for a sustained period, a new record, solar generation surpassed 15 gigawatts for the first time, and gas contributed just 1.2% of the energy mix at its lowest point.
The direction of travel is clear as electricity is becoming more insulated from fossil fuel volatility, while gas is not. For businesses that still rely heavily on gas for heating, processing, or operations, every geopolitical disruption will continue to hit harder and harder.
The UK government has recognised this trend and is actively working to accelerate it. The recently announced Seventh Carbon Budget sets a legally binding target to reduce emissions by 87% below 1990 levels by 2040. Energy Secretary Ed Miliband has stated openly that the only way to protect family and business finances is to drive for clean homegrown power that we control. The government has also announced measures to begin decoupling gas and electricity prices, including raising the Electricity Generator Levy from 45% to 55% from July 2026.
These are long term structural shifts, they will not lower your next energy bill. They do, however, confirm that the businesses best positioned for the future are those that are reducing their energy consumption, electrifying their operations, and taking control of how and when they use power.
The bigger picture
The July 2026 price cap rise is not an isolated event. It is the latest chapter in a pattern that has been playing out since 2021. Global fossil fuel markets are volatile, geopolitical disruption is a recurring reality, and the structural costs built into UK energy bills continue to rise.
For businesses, the message is no longer about riding out short term volatility and hoping prices come back down. Prices are not coming back to where they were before 2021. The new baseline is higher, the non commodity costs are permanent, and the next disruption is always a matter of when, not if.
The businesses that recognise this and invest in energy efficiency, monitoring, and on site generation now are the ones that will be best protected when the next headline hits.
At Powerhub Solutions, we help businesses across manufacturing, hospitality, logistics, healthcare, retail, and beyond to take control of their energy costs with proven, in house solutions. We are the only company in the UK that provides all four energy saving solutions and handles the entire process from start to finish, with no subcontractors.
If your energy costs are rising and you want to understand what you can do about it, get in touch with our team today, here.
