January 2026 Energy Price Cap: What Ofgem’s rise means for your bills
Households across Britain will see a small rise in their energy bills from January 1, 2026, after Ofgem confirmed its latest price cap will push costs slightly higher.
The change has taken many by surprise. Only hours before the announcement, analysts at Cornwall Insight had predicted a 1% fall, based on lower wholesale gas and electricity prices.
Instead, Ofgem announced a 0.2% increase, taking the average yearly bill for a typical dual-fuel home paying by direct debit from £1,755 to £1,758.
The rise is small, but it comes at a time when many families are already struggling with tight household budgets.
Why is the price cap rising?
The price cap limits the unit rate and standing charge that suppliers can bill customers on standard variable tariffs. It does not cap the total bill, as that still depends on how much energy a household uses.
Wholesale energy costs have dropped by around 4% over the last three months and are more stable than they have been for years.
But Ofgem says the market is still “volatile”, and even small shifts can lead to unexpected changes in the cap — such as this rise despite falling wholesale prices.
How much more will I pay from January 2026?
Under the new cap, the typical home will pay about 28p more a month. Ofgem says that once inflation is taken into account, the cap is actually lower than it was at the start of 2025, though most households are unlikely to feel any better off.
Standing charges are also going up: electricity by about 2% and gas by 3%, adding roughly 2p a day.
These increases are partly due to government schemes, including the widened Warm Home Discount, which is helping 2.7 million extra low-income households this winter, almost a million of them families with children.
Bills will also include a contribution of about £1 a month towards the Sizewell C nuclear project.
What does it mean for me?
Consumer groups warn the timing could make the coming winter particularly difficult.
Citizens Advice says the rise will lead to another “tough winter” for millions already in debt to their energy supplier. And with another cap change due in April — also expected to increase — many families feel stuck with never-ending bill rises.
Ofgem says around eight million people who pay by standard credit could save money by switching to direct debit.
Ministers say they are focusing on expanding support for low-income households and boosting clean energy projects to help bring bills down in the long run.
