UK Energy Market Update: Rising Costs and New Regulations
Energy market uncertainty remains a challenge for UK businesses heading into autumn 2026.
Ofgem confirmed on 26 August 2026 that the domestic energy price cap will rise by just under 4% from October, taking the average annual household bill to £1,723. The increase has been driven largely by higher wholesale gas costs, with gas prices remaining a significant factor in UK energy pricing.
It is important to note that business energy prices are not capped in the same way. However, many of the same wholesale market pressures that affect household energy costs also influence the rates quoted to commercial customers. Wholesale gas and electricity markets have continued to fluctuate throughout late summer, creating an uncertain backdrop for businesses reviewing or renewing their energy contracts.
For organisations entering fixed-term agreements, market conditions at the time a contract is agreed can have a significant impact on costs over the life of the contract.
Why Wholesale Energy Prices Matter to Businesses
2026 has presented energy buyers with a challenging mix of geopolitical uncertainty, supply concerns and changing market conditions.
Wholesale energy markets experienced significant price movements during the year, driven by a range of factors including international events, infrastructure issues and evolving supply-demand dynamics. Energy prices have remained sensitive to developments both within the UK and globally, highlighting how quickly market conditions can change.
For businesses entering fixed-term energy contracts, even relatively small differences in wholesale market pricing can have a substantial impact over a three, four or five-year agreement. Understanding when a contract was agreed and how the final rate was calculated has become increasingly important in a fluctuating market.
Ofgem Preparing to Regulate Business Energy Brokers
In 2026, Ofgem confirmed that it is preparing to take on formal regulatory powers over third-party intermediaries (TPIs), including energy brokers and consultants who arrange contracts on behalf of business customers.
The move follows the Government’s plans to introduce regulation in the sector and forms part of a wider effort to increase transparency and consumer protection. Ofgem has identified concerns including transparency, hidden commission and poor customer outcomes in some areas of the market.
The anticipated rollout is expected to take place in stages:
2026
Ofgem continues its market review and gathers evidence to support the development of a future regulatory framework.
2027
Industry preparation and consultation are expected to continue as the framework develops.
2028 and beyond
Subject to legislation and implementation timelines, a formal regulatory regime is expected to be introduced, requiring brokers to comply with regulatory requirements and oversight.
Until that framework is fully implemented, much of the broker market continues to operate under voluntary industry standards rather than direct statutory regulation.
Why existing energy contracts still matter
The planned regulatory framework is largely forward-looking.
It is intended to govern how brokers operate in the future rather than retrospectively review contracts entered into years earlier.
Some businesses may have signed energy agreements without fully understanding how broker commission was incorporated into the rates they were offered. As scrutiny of the sector continues, businesses may wish to revisit existing contracts and ask four important questions:
- How was the final unit rate calculated?
- Was the broker commission disclosed?
- Were alternative contract options presented?
- Did the business receive sufficient information to make an informed decision?
A contract signed several years ago may still warrant review regardless of future regulatory changes.
Can businesses recover historical losses?
Where concerns exist regarding undisclosed commission or excessive broker charges, businesses should seek independent legal advice regarding their position.
Potential remedies will depend on the specific facts of the case, the contractual arrangements involved and applicable limitation periods.
Importantly, future regulation will not automatically revisit or compensate historic transactions. Businesses concerned about past agreements may therefore wish to assess their position sooner rather than later.
Understanding your position
Rising wholesale costs and increasing regulatory scrutiny are changing the business energy landscape.
The businesses best positioned to manage these developments are those that understand precisely what they are paying for, how their contracts were arranged and whether all relevant costs were properly disclosed.
How we can help
At Business Energy Claims, we review commercial energy contracts to identify potential undisclosed commission and excessive broker charges. Our team of industry and legal experts provide an initial assessment of whether you may have grounds to pursue a claim.