Understanding the UK Energy Price Cap January 2026 Impact

The UK energy market changed again in January 2026 following the latest update to the energy price cap. While gas prices eased slightly, electricity unit rates increased, meaning many households are still facing higher costs — particularly those on standard variable tariffs.

Understanding what the price cap actually does, why electricity prices rose, and how different tariffs are affected can help households make more informed decisions about their energy bills in 2026.

This guide explains what changed in January, how it may affect your bills, and what options are available if you want more certainty over your energy costs.

Compare energy prices to see today’s available tariffs

What is the UK energy price cap?

The UK energy price cap is a limit on the maximum amount suppliers can charge for each unit of gas and electricity on standard variable tariffs and default tariffs. It is set by the regulator and applies only to households that have not chosen a fixed or special deal.

The cap does not limit total bills. Instead, it caps:

• Unit rates for gas and electricity
• Daily standing charges

The cap is set under Ofgem’s energy price cap framework and limits how much suppliers can charge per unit of energy, which is typically measured in kilowatt hour (kWh). Your actual bill depends on how much energy you use, the tariff you are on, and how you pay.

Your Next Bill Could Be Lower

Use our calculator to see what you’d save — takes under 6 minutes.

Try the Energy Bill Calculator

How often does the energy price cap change?

The energy price cap is reviewed every three months. Changes usually take effect in:

• January
• April
• July
• October

Each update reflects changes in wholesale energy prices, network costs, environmental obligations, and supplier operating costs. Prices can rise or fall depending on how these factors move.

The next price cap review is always scheduled quarterly, meaning household rates can change again later in the year.

What is the UK energy price cap for January 2026?

The UK energy price cap for January 2026 sets the maximum unit rates and standing charges that suppliers can charge customers on standard variable tariffs. It does not cap total bills.

The cap is calculated using typical household energy consumption assumptions and reflects wholesale prices, network charges, and policy costs. Actual household bills may be higher or lower depending on individual energy use.

Households on fixed energy tariffs are not affected by price cap changes during the length of their contract.

What changed in the January 2026 price cap?

In January 2026, electricity unit rates increased by around 5.1%. At the same time, gas unit rates fell slightly.

Because electricity makes up a significant share of most household bills, the increase meant many households continued to face higher overall energy costs, even though gas prices eased.

Customers on standard variable tariffs are most directly affected, as their rates automatically update when the price cap changes.

Check how current energy prices compare to your tariff

Why did electricity prices rise while gas prices fell?

Electricity and gas prices are influenced by different cost pressures.

Electricity prices rose mainly due to:

• Higher wholesale electricity prices earlier in the year
• Increased network and infrastructure charges
• Ongoing costs linked to maintaining grid stability

Gas prices fell slightly as wholesale gas markets stabilised. However, electricity pricing is not directly tied to gas alone, so lower gas prices do not always reduce the overall price of energy paid by households.

Who does the energy price cap apply to?

The energy price cap applies to households on:

• Standard variable tariffs
• Default tariffs, often applied after a fixed deal ends

If you are on a fixed tariff, your rates stay the same for the duration of your contract, regardless of price cap changes. When a fixed deal ends, customers are usually moved onto a standard tariff unless they choose a new deal.

Are energy bills still going up in 2026?

Energy bills in 2026 depend on several factors, including:

• Whether you are on a fixed or variable tariff
• Your household energy use
• Future changes to wholesale prices and network costs

Even relatively small changes in unit rates can affect the overall cost of energy across a year, particularly for households with higher electricity consumption.

What is a standard variable tariff?

A standard variable tariff is a type of variable energy tariff that changes in line with the energy price cap. It usually has:

• No fixed end date
• No exit fees
• Rates that can increase or decrease every three months

While standard tariffs offer flexibility, they also expose households to price rises when the cap increases.

What is a fixed energy tariff?

A fixed energy tariff locks in unit rates and standing charges for a set period, usually 12 or 24 months.

Fixed tariffs offer:

• Predictable pricing
• Protection from price cap increases
• A defined contract length

Some fixed deals include exit fees, so it is important to review the terms before switching.

Save More with Dual Fuel Energy Tariffs

Switch both gas and electricity in just 6 minutes and cut your bills.

Compare Dual Fuel Tariffs

Fixed vs standard variable tariffs after the January 2026 cap

Following the January 2026 update, many fixed tariffs remained competitively priced compared to standard variable tariffs.

For households concerned about further increases, fixed deals can offer stability. However, suitability depends on current rates, expected usage, and how long the household plans to stay in the property.

This is why many households choose to compare energy prices before making a decision.

Is it worth fixing your energy tariff now?

Fixing an energy tariff may suit households that:

• Want predictable monthly bills
• Prefer certainty over flexibility
• Are concerned about future price cap changes

Staying on a variable tariff may suit households that:

• Expect prices to fall
• Want the freedom to switch without exit fees
• Are currently on a competitive standard tariff

There is no single right choice, which is why reviewing options regularly can be helpful.

Compare energy prices and see if switching could suit your home

Are there predictions for changes in the energy price cap in early 2026?

Predicting future price cap changes is difficult, as each review depends on wholesale markets, network costs, and policy adjustments at the time.

Wholesale energy markets can fluctuate, meaning future updates in 2026 could result in prices rising, falling, or remaining broadly stable.

Because of this uncertainty, some households prefer to review tariff options regularly rather than relying on price cap predictions.

How much could households save by switching energy supplier?

Savings vary depending on energy usage, current tariff, and available deals at the time of switching.

Recent comparisons show that some households could save hundreds of pounds a year by moving from a standard variable tariff to a fixed deal. However, savings are not guaranteed and will differ between households.

Why comparing energy prices matters after a price cap change

A price cap change can act as a prompt to review your tariff. Even small differences in unit rates can have a noticeable impact over time.

Using a comparison service allows households to:

• See current market options
• Understand how their tariff compares
• Decide whether switching could offer better value

Taking time to compare energy prices can help households make informed decisions.

What should households look for in fixed energy deals in January 2026?

The best fixed energy deal depends on individual usage, preferences, and circumstances.

When reviewing fixed energy deals in January 2026, households may want to consider:

• Unit rates and standing charges
• Length of the fixed term
• Exit fees
• Whether the tariff is green or standard
• Payment methods and billing options

Comparing tariffs side by side can help determine whether a fixed deal offers better value than remaining on a standard variable tariff.

How long does it take to switch energy supplier?

Most energy switches can be completed online in a few minutes. The process usually involves entering your postcode, reviewing available tariffs, and choosing whether to switch.

The switch itself typically takes a few weeks and does not interrupt your energy supply.

Will switching affect my energy supply?

No. Your gas and electricity supply continues as normal throughout the switching process. Only the supplier you pay and the rates you are charged change.

Energy switching is regulated to ensure continuity of supply.

What should you check before choosing a new tariff?

Before choosing a new energy tariff, households may want to check:

• Unit rates and standing charges
• Contract length
• Exit fees
• Payment method, such as monthly direct debit
• Customer service standards

Looking beyond headline prices can help avoid unexpected costs later.

View current energy tariffs and compare energy prices

What happens if prices fall after I fix?

If prices fall after you fix, you may not automatically benefit from lower rates unless your tariff allows penalty-free exits.

Some fixed deals include exit fees, while others offer more flexibility. This is why some households prefer shorter fixed terms during uncertain periods.

Are green energy tariffs affected by the price cap?

Green tariffs on standard variable rates are still subject to the energy price cap. Fixed green tariffs are priced separately and may sometimes cost more, although this is not always the case.

Comparing green and non-green tariffs can help households balance cost and environmental priorities.

How energy usage affects the impact of price changes

Households with higher electricity usage feel price increases more strongly. Factors that can increase consumption include:

• Electric heating
• Home working
• Electric vehicles
• Larger or less efficient appliances

Understanding usage patterns helps explain why price changes affect households differently.

Prepayment Meter Tariffs – Find Cheaper Options Today

Compare top-up tariffs in your area and cut your prepayment energy costs.

Find Cheaper Prepayment Tariffs

What else can households do to reduce energy costs?

Alongside switching tariffs, households may reduce costs by:

• Improving insulation and energy efficiency
• Using more efficient appliances
• Reducing standby power usage
• Monitoring consumption with smart meters

These steps can complement tariff choices and help manage bills over time.

Correct as of 06 January 2026

FAQs about the UK energy price cap and electricity prices