Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
An account already exists for this email address, please log in.
Energy bills to rise by 0.2% in January 2026
Costs are rising to cover funding of the Sizewell C nuclear project in Suffolk
The Ofgem energy price cap will rise by 0.2% for the first three months of 2026, taking the average dual-fuel household bill to £1,758 per year in the first quarter.
It comes after the regulator announced a rise to the energy price cap of 2% to £1,755 per year between this October and December.
The January rise will see the average household paying for gas and electricity by direct debit pay an extra 28p per month, or £3.36 a year between January and March, compared to now.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
How much more you’ll pay depends on your usage as the price cap just sets a limit on how much suppliers can charge customers for one unit of electricity and gas.
Ofgem said year-on-year, the new January cap was 2%, or £37 per year, lower than the same three months in 2025.
Tim Jarvis, director general of Markets at Ofgem, said: “While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets.”
Ofgem said wholesale energy costs were “stable”, having fallen by 4% over the past three months.
However, the regulator said the price cap was rising in January due to government policy and operating costs, including funding the Sizewell C nuclear project in Suffolk.
Swipe to scroll horizontally
Electricity and gas unit prices and standing charges, 1 October 2025 to 31 March 2026
Header Cell - Column 0
Energy price cap per unit and standing charge
1 October to 31 December 2025
Energy price cap per unit and standing charge
1 January to 31 March 2026
Electricity
26.35 pence per kWh
53.68 pence daily standing charge
27.69 pence per kWh
54.75 pence daily standing charge
Gas
6.29 pence per kWh
34.03 pence daily standing charge
5.93 pence per kWh
35.09 pence daily standing charge
What is the energy price cap?
The price cap came into effect in January 2019 and was introduced by Ofgem to stop customers on default tariffs being overcharged by energy suppliers.
Default tariffs are typically the most expensive deals for households.
The price cap sets a limit on how much energy firms can charge customers per unit of electricity and gas, and for their standing charge. It used to be changed every six months but is now amended every three months.
Because the price cap sets a limit on the amount customers are charged per unit of gas and electricity, this means you may pay more or less than others depending on your usage.
Where you live also affects how much you pay as there can be different regional rates, as well as how you pay for your energy.
The price cap applies to you if you’re on a default tariff (not a fixed tariff) and pay by direct debit, standard credit, prepayment meter or through an Economy 7 meter.
The Ofgem price cap only applies to households in England, Wales and Scotland as Northern Ireland has its own regulator, the Utility Regulator.
How to save money on your energy bills
Ofgem says around 34 million customers are on default, or standard variable, tariffs. However, these are usually more expensive than fixed tariffs, where you pay the same rate over a fixed period of time.
Fixed tariffs can save you money if you desire certainty over what rate you’ll pay, but you can end up paying more than those on default tariffs if wholesale energy prices fall and feed into the price cap. Fixed tariffs also come with exit fees if you leave before the term is up.
If you want to sign up for a fixed tariff, you can shop around for the best deals via comparison sites like Go.Compare, MoneySuperMarket or MoneySavingExpert.com.
Gareth Kloet, expert at Go.Compare Energy, said: “Not every deal will work out cheaper for everyone, so it’s important to think about your own energy use.”
Ofgem also says the eight million customers paying for their energy by standard credit could also save £136 a year by switching to Direct Debit.See our explainer here on 14 other ways to save on your energy bill.
Sign up for MoneyWeek's newsletters
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
