Energy price cap changes 2026: New January rates

What is happening to the energy price cap between January and March 2026?

Ofgem has confirmed the energy price cap changes for the period 1 January to 31 March 2026, setting new limits on what suppliers can charge customers on default tariffs for each unit of electricity and gas, as well as the daily standing charge.

The update results in a small monthly increase of around 28 pence for a typical dual-fuel household paying by Direct Debit. While that is a 1% (£20) rise compared to the same period in 2025, the inflation-adjusted figure shows bills are 2% (£37) lower year-on-year.

For a household using average energy volumes, the annual cost under the new cap would be £1,758, an increase of just 0.2% from the previous quarter.

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What are the new electricity unit rates and standing charges for 2026?

From 1 January to 31 March 2026, electricity customers on a standard variable tariff (default tariff) paying by Direct Debit will face the following average prices across England, Scotland and Wales (VAT included):

Electricity price cap rates (Jan–Mar 2026)

These rates represent the average across all regions, though individual areas may pay slightly more or less due to local distribution costs.

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What are the new gas rates under the energy price cap?

Gas customers on a default tariff paying by Direct Debit will pay:

Gas price cap rates (Jan–Mar 2026)

Like electricity rates, these values include 5% VAT and reflect regional averages.

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Why has the energy price cap changed?

Ofgem adjusts the cap every 3 months to reflect changes in the underlying costs of supplying energy. These include:

What costs make up the energy price cap?

1. Wholesale energy costs
   The price suppliers pay for gas and electricity on global markets.
2. Network costs
   Charges for maintaining and upgrading the UK’s gas and electricity networks.
3. Operating costs
   Metering, customer service, billing, and IT infrastructure.
4. Policy costs
   Levies to fund renewable energy schemes and social programmes.
5. VAT
   Currently set at 5% for domestic energy bills.

These costs are split between the unit rate (price per kWh) and the standing charge (the fixed daily fee).

How do 2026 price cap rates compare to the previous quarter?

Ofgem’s statement notes a monthly increase of 28p for a typical household compared to the October–December 2025 cap. The annualised difference comes to about £20 higher (1%).

However, after accounting for inflation over the previous 12 months, the real cost is £37 lower (+2%) compared to January–March 2025.

How do regional energy price cap rates differ?

Although the national averages are widely reported, the cap is actually set regionally because distribution and network costs vary across Great Britain.

Ofgem publishes detailed regional tables for:

• Electricity unit rates
• Gas unit rates
• Standing charges

Regions with higher distribution costs (for example, some Scottish and South West areas) tend to face higher standing charges, while others benefit from lower tariffs.

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Who is protected by the energy price cap?

You are covered by the energy price cap if you are on a default tariff, including:

• Standard credit (when paying after you receive your bill)
• Direct Debit
• Prepayment meter (PPM)
• Economy 7 (E7) meter
• Smart meters on default pricing
• Standard variable tariffs

The cap does not apply to fixed-rate deals or special tariffs such as loyalty schemes, tracker tariffs, or time-of-use tariffs (outside of E7 defaults).

Does the cap limit your total bill?

No — the price cap is not a cap on your total energy bill. It only limits:

• The unit rate (pence per kWh)
• The standing charge

Your actual bill depends on how much energy you use, your region, and your payment method.

What is the typical annual energy bill under the January–March 2026 price cap?

Using Ofgem’s average household consumption figures:

Typical annual bill (Jan–Mar 2026)

This calculation assumes typical household usage — your costs may differ if your usage is above or below the national average.

Will standing charges change again in 2026?

Standing charges remain one of the most debated parts of the cap. They cover fixed costs such as:

• Maintaining the power and gas networks
• Metering costs
• Supplier overheads
• VAT
• Policy costs

Ofgem regularly reviews these charges, and consultation in 2025 explored ways to rebalance them in future years. However, for the January–March 2026 period, the standing charges listed earlier remain in place.

What is the Debt Relief Scheme launching in 2026?

From early 2026, Ofgem and the government plan to introduce a Debt Relief Scheme to support households struggling with energy debt. Key points include:

• Designed to help around 195,000 people on means-tested benefits
• Aims to reduce or remove historic energy debt
• Expected to be managed in partnership with suppliers and regulators
• Intended to prevent vulnerable customers from falling further behind on bills

Full details will be published closer to the launch date.

Can switching energy supplier help lower costs?

The energy price cap applies only to default tariffs, so if suppliers begin to release competitive fixed tariffs, switching may reduce your bills.

When might switching be worthwhile?

• If a supplier offers a fixed tariff below the cap
• If you prefer price certainty
• If you want to avoid future cap increases
• If your current supplier has higher-than-average standing charges

You can compare options using the internal link anchor:

• You can compare energy prices to see if a fixed deal beats the January–March 2026 cap.

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How does Ofgem calculate typical household energy use?

Ofgem’s Typical Domestic Consumption Values (TDCVs) represent average usage, currently around:

These figures are used for national comparisons, price cap modelling, and supplier calculations.

Your usage may differ depending on:

• Number of people in your home
• Heating system type
• Home insulation levels
• Lifestyle and appliances

What happens when the next price cap update is published?

Ofgem will publish the next price cap for 1 April to 30 June 2026 by 25 February 2026 — though they may release it earlier depending on market conditions.

The most influential factors in upcoming caps include:

• Wholesale gas prices (driven by global supply/demand)
• Storage capacity levels across Europe
• Network cost adjustments
• Government policy costs
• Supplier operating costs

After a period of volatility from 2021–2024, wholesale prices stabilised in 2025 but remain exposed to global shocks.

Where can I find predictions for future energy price cap changes?

Forecasts for future changes to the price of energy are widely followed, especially as households try to plan for higher bills, winter usage, and changes to the maximum amount suppliers can charge. While Ofgem never provides forward-looking price estimates, several independent organisations release projections based on wholesale markets, policy changes, and the wholesale cost of energy.

Cornwall Insight price cap predictions

One of the most frequently cited sources for price cap predictions is Cornwall Insight, an independent energy consultancy. They analyse wholesale markets, supplier costs, and seasonal demand to provide early estimates of what future caps may look like. Their forecasts help domestic customers, energy companies and policy groups understand whether new prices are expected to rise or fall.

Ofgem reviews and official publications

Ofgem, the energy regulator, reviews the cap every three months. While Ofgem does not forecast future caps, its publications provide the inputs that influence the final level, such as:

• Changes in the wholesale cost of energy
• Adjustments to network charges
• Costs linked to the Warm Home Discount Scheme
• Supplier operating costs
• Policy updates affecting domestic customers

These reviews outline the different costs involved in setting the maximum price per unit of energy and per kilowatt hour of energy, helping households understand why rates change.

Energy market reports from suppliers

Some energy companies release market commentary on trends affecting the price of energy, including gas storage levels, LNG imports, and geopolitical impacts. While less detailed than consultancy forecasts, these reports help indicate whether electricity bills and gas costs are likely to rise.

Why predictions matter for households

For many UK homes, especially those on a standard variable energy tariff, understanding future projections helps with budgeting. It also helps people decide whether to:

• Fix a tariff or stay on the cap
• Switch payment method
• Submit a meter reading before new caps take effect
• Move from standard credit to Direct Debit
• Change tariff based on type of meter (e.g., smart meter, prepayment)

Soft reminder: Predictions can change quickly due to wholesale markets, so they should be viewed as guidance rather than certainty.

How different costs affect future price caps

When Ofgem sets the cap, it considers a range of different costs that make up the final price. These include the cost of a kilowatt hour (kWh) of electricity, the unit of gas, and the fixed charges that apply to all domestic customers. The energy regulator Ofgem calculates these using real market data, meaning households pay a capped rate per kwh of gas and electricity across Great Britain (excluding Northern Ireland, which has a different regulatory framework).

Future caps may rise or fall depending on:

• Movements in the wholesale cost of energy
• Seasonal demand patterns
• Supplier operating performance
• Adjustments to government policy
• Uptake of financial support schemes
• Changes in the Warm Home Discount Scheme
• Costs associated with prepayment customers, who are also protected under Ofgem’s rules

Understanding these factors helps consumers track why the new price cap may fluctuate and how the maximum amount suppliers can charge is calculated each quarter.

Why is the energy price cap increasing this January?

The energy price cap is increasing this January because the underlying costs faced by suppliers have risen in several key areas. Ofgem’s price cap reflects the maximum amount that energy companies can charge domestic customers for each unit of energy and each kilowatt hour of gas and electricity. When these costs increase, the cap must rise to ensure suppliers can recover the wholesale cost of energy and continue providing services.

Higher wholesale prices

The biggest driver of the January increase is the rise in wholesale market prices. Gas and electricity traded at higher levels during the months leading up to the January review period, and these costs directly affect the new price cap. Even small increases in the market price of a kWh of gas or electricity can shift the overall cap, because wholesale costs make up a significant part of the total.

Network and operating cost adjustments

Ofgem reviews include updates to the costs of running the energy networks. These “non-energy costs” have increased in some regions, including the expenses linked to maintaining infrastructure and balancing the grid. These adjustments affect the standing charge as well as the unit rate.

Changes in policy and customer support schemes

Government-backed schemes such as the Warm Home Discount Scheme and other forms of financial support also influence supplier costs. When policy costs rise, a portion is reflected in the cap to ensure suppliers can meet their obligations to vulnerable households.

Supplier operating costs

Energy suppliers must cover day-to-day costs such as metering, billing, customer service, and systems. Any rise here, including costs linked to managing prepayment customers or updating type of meter infrastructure, can contribute to an increase in the January cap.

Seasonal demand and hedging

Winter demand patterns affect the price that suppliers pay for future energy contracts. When cold weather leads to higher expected consumption, the price of energy on the wholesale market tends to rise. Suppliers also hedge energy months in advance, so earlier volatility can impact the January review.

Why this matters for households

Even though the increase for January 2026 is relatively small — around 28p per month for a typical home — rising underlying costs mean higher bills for many households. The cap still prevents suppliers from charging above the regulated maximum price per kilowatt hour of energy, but it does not stop bills increasing if market conditions worsen.

Households who want more predictability may consider checking whether a fixed energy tariff offers better value during months with higher regulated prices.

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What should I do if my energy bills go up due to a price cap change?

If your energy bills increase after a new price cap comes into effect, there are several steps you can take to manage costs, check whether you’re on the right tariff, and reduce the impact on your household budget. A price cap rise affects the unit of energy, standing charges and the cost per kilowatt hour, so reviewing your situation early can help you stay in control.

Check whether you’re on the best tariff

Start by confirming which tariff you are currently on. The price cap only applies to standard variable tariffs, so you may be able to save money by switching to a fixed energy tariff if suppliers are offering competitive deals. Use your most recent meter reading to ensure your comparison is accurate.

Consider switching energy companies

If suppliers begin offering new fixed tariffs below the regulated rates, switching could reduce your bill. Each supplier sets its own unit rates and standing charges, so it’s worth comparing several providers — especially if your region has different costs due to network charges.

Review your payment method

Customers paying by standard credit (paying after receiving the bill) usually pay higher prices than those using Direct Debit. Switching to Direct Debit could lower your annual costs. Prepayment customers can also check if moving to a smart meter will offer better rates, depending on type of meter and eligibility.

Reduce energy usage where possible

Small adjustments, such as lowering thermostat settings by 1°C or reducing peak-time electricity use, can lower consumption. Since the cap limits the price per kilowatt hour of energy but not total bills, using less can help offset higher rates.

Check eligibility for financial support

Households may qualify for help through government-backed schemes such as:

• The Warm Home Discount Scheme
• Winter Fuel Payments
• Cost-of-living support
• Supplier affordability programmes
• Local council support schemes

These can provide direct relief if rising bills create pressure.

Speak to your energy supplier early

If you’re struggling to pay, contact your supplier as soon as possible. Under Ofgem rules, suppliers must support domestic customers by offering:

• Affordable repayment plans
• Emergency credit for prepayment customers
• Advice on reducing usage
• Extra help for those on the Priority Services Register

Engaging early can prevent debt from building up, especially ahead of seasonal price changes.

Track future price cap updates

Future Ofgem reviews and market forecasts (such as those from Cornwall Insight) can indicate whether the next cap is expected to rise or fall. This can help you decide whether to stay on the cap or switch to a fixed-rate deal before new prices take effect.

FAQs about energy price cap changes 2026