Energy Bill Calculator: the July 2026 changes
On 1 July 2026 the ECO levy came off bills, most Renewables Obligation costs moved to public funding, and Ofgem's "typical household" cap figure became £1,663. Check your bill against the new numbers — and see what each party says it would do next.
Your energy costs
What actually changed on 1 July 2026
- The ECO levy is gone from bills. The Energy Company Obligation, which funded insulation schemes through a charge on every bill, was scrapped as a bill item at the November 2025 Budget — worth roughly £59 a year for a typical household, plus a small VAT knock-on.
- Most Renewables Obligation costs moved to the taxpayer. From 2026 to 2029 the government pays 75% of domestic RO costs (~£2.3 billion a year) instead of billpayers.
- Together the package is worth about £150 a year for a typical household — the government's stated goal from the Budget, described by analysts as getting "halfway" to its £300 bills pledge.
- Unit rates rose sharply — and the "typical bill" number was rebased. The July–September cap is a 13% increase (about £221 on the old typical-household basis, to £1,862), driven by the oil-price spike from the US–Iran conflict. Separately, on 1 July Ofgem updated its typical-consumption values (households use ~7% less electricity and ~17% less gas than the old assumption), which restates the same unit rates as £1,663 for a typical home. So rates went up; the headline yardstick shrank.
- Still on your bill: 5% VAT, network charges, and the remaining quarter of domestic RO costs.
What the parties would do next
- Labour (in government) — the levy reform above, the Energy Independence Bill's protections for vulnerable households, and GB Energy investment.
- Green Party — cut bills by a further £150 before winter and a mass insulation programme.
- Reform UK — remove VAT and remaining green levies from bills and scrap net zero.
- Conservatives — axe the carbon tax, which they argue feeds into electricity prices.
Frequently asked questions
What changed on energy bills on 1 July 2026?
Two things. First, the levy reforms from the November 2025 Budget took full effect: the Energy Company Obligation (ECO) no longer appears on bills, and 75% of domestic Renewables Obligation costs are paid from public funds until 2029 — together worth about £150 a year for a typical household. Second, Ofgem updated its "typical household" figures to reflect lower real usage, so the quoted typical price cap became £1,663 a year for July–September 2026.
Did the price cap actually fall to £1,663?
No — be careful with that number. Unit rates actually rose about 13% for July–September (the oil-price spike from the US–Iran conflict), announced in May as a £1,862 typical bill. On 1 July Ofgem updated its typical-consumption values (households now use about 7% less electricity and 17% less gas than the old assumption), which restates the same higher unit rates as £1,663 for a typical home. Your unit rates and standing charge are what actually determine your bill — and they went up.
What would each party do about energy bills?
The Greens want a further £150 cut before winter plus a big insulation programme; Reform UK would cut VAT on energy and remaining green levies and scrap net zero targets; the Conservatives would axe carbon taxes; Labour's approach is the levy reform now in force plus the Energy Independence Bill's protections and GB Energy investment.
Is VAT still charged on energy bills?
Yes — 5% VAT still applies to domestic gas and electricity, and it's one of the levies Reform UK has proposed removing. The July 2026 reforms removed ECO and most Renewables Obligation costs from bills but left VAT unchanged.
What is Andy Burnham's energy cost plan?
An "affordable energy guarantee" being drawn up by the incoming Prime Minister's team: every household would get a discounted rate for a set amount of "essential" gas and electricity, with thresholds adjusted for household size and extra help for low-income homes. Reported estimates put middle-income savings at roughly £100–£225 a year depending on the scheme's size, but it is a plan in development — nothing has been announced or funded, and this page will be updated if it is.