Morning everyone,
Rubbish news to wake up to, but Ofgem have announced this morning that their price cap will actually rise in January 2026! This is surprising because all industry experts were expecting a minor decrease of about 1%, instead we’re seeing a 0.2% increase.
Overall, the Price Cap will increase in January 2026 to £1,758 from the current £1,755 – but half of this increase is going directly to supplier profits! Energy suppliers can expect to benefit from an additional £50million in profits from this announcement!
This increase in energy bills WILL NOT impact everyone equally. Those worst off will be low-usage households and electricity-only households – so effectively people in small, modern apartments (like me, yay).
Breakdown of the January 2026 Price Cap Changes
Here is a summary of how standing charges and unit rates are changing for both gas and electric:
| Current (1 October – 31 December 2025) | New (1 Janaury – 31 March 2026) | %age Change | |
| Electricity Standing Charge | 53.68p per day | 54.75p per day | +1.99% |
| Electricity Unit Rate | 26.35p per kWh | 27.69p per kWh | +5.09% |
| Gas Standing Charge | 34.03p per day | 35.09 per day | +3.11% |
| Gas Unit Rate | 6.29p per kWh | 5.93p per kWh | -5.72% |
As you can see, the increases are comparatively large for electricity-only users. The fact that the overall price cap is only increasing by 0.2% is because the large drop in gas usage costs are balancing out the various increases in all standing charges and the electricity unit rates.
Further Analysis of Energy Bills from January 2026
I find it useful to look at a few different ways of analysing the changes, so thought I’d provide some of my breakdowns for your perusal. The figures below are rounded to the nearest £1
MEDIUM USAGE HOUSEHOLDS
Standing charges
- Annual Electricity Standing Charges will increase by £4
- Annual Gas Standing Charges will increase by £4
- Total Standing Charge increase is therefore £7.78 per year
Unit costs
- Average cost of electricity usage annually will increase by £36
- Average cost of gas usage annually will decrease by £41
- Total average cost of gas and electricity usage annually will therefore decrease by £5
Adding these numbers together (and deducting the £41 saving) gives us the £3 increase in overall energy bills we’ve been told to expect, but these figures are calculated using the average usage values for medium usage households. We can see that electricity-only households are much worse off (£40 increase) as they do not benefit from the reduction in gas unit rates.
This represents a 0.2% increase in energy bills for average medium usage, dual fuel households and a huge 4.4% increase in energy bills for medium-usage electricity-only households.
Lets look at both low-usage and high-usage households.
LOW USAGE HOUSEHOLDS
Standing charge changes are the same regardless of usage, so gas and electric will each have a £4 increase in standing charges.
Unit costs
- Average cost of electricity usage annually will increase by £24
- Average cost of gas usage annually will decrease by £27
- Total average cost of gas and electricity usage annually will therefore decrease by £3
Here we see low-usage households aren’t getting impacted quite the same, but the percentage changes are actually higher.
These changes represent a total increase of about 0.4% for average low-usage, dual fuel households and a 4.2% increase in energy bills for low-usage electricity-only households. As you can see, the increase is proportionally higher for low-usage, dual fuel households.
HIGH USAGE HOUSEHOLDS
Standing charge changes are the same regardless of usage, so gas and electric will each have a £4 increase in standing charges.
Unit Rates
- Average cost of electricity usage annually will increase by £55
- Average cost of gas usage annually will decrease by £61
- Total average cost of gas and electricity usage annually will therefore decrease by £7
These changes represent a total increase of about 0.06% for average high-usage, dual fuel households and a 4.6% increase in energy bills for high-usage electricity-only households.
What is causing the Ofgem Price Cap to Increase in January 2026?
So, here’s the annoying bit – the cost of the actual gas and electricity for an average, medium-usage household has fallen by £30!
So, what the hell is causing the prices to go up?! Mostly, the increases are in policy costs, this is the cost of the Government’s expanded warm home discount and the cost of the new Sizewell C power plant, that we’re all contributing to. There’s also been an increase in the cost of running an energy company which is being passed onto us, so this will be operating costs such as wages.
The oddest part, as mentioned at the start of the article is that half of the increase is going toward supplier profits! It’s only £1.51 per household, but that equates to almost £50m more per year to energy suppliers in profits!
We’re also expecting that the price cap will increase much more in April, especially as Ofgem are likely to start charging us for the their new Debt Relief Scheme around then.
Can I Pay Less for my Energy Bills?
As always, yes. These prices impact people on SVTs, which is well over 60% of households, so most of you are missing out on huge savings. It takes like 3 minutes to sign up to a new, cheaper tariff.
Today, EDF launched a new tariff that £159 cheaper for an average medium-usage household. Click the button below to head to Uswitch and run a price comparison and save on your energy bills today!
