The energy price cap will increase by 0.2% from New Year's Day – but what does that really mean?

Ofgem, the energy regulator, has announced today that energy bills for anyone on price-capped energy tariffs will increase by 0.2% on 1 January 2026. This means that bills for homes using a typical, medium amount of energy will be around £1,758 a year, or £147 a month. 

This is only a very small change from the current rate for medium-use homes of around £1,755 a year, or £146 a month. But that's not the whole story - the new rates shift more costs onto electricity charges while decreasing the cost of each unit of gas. Standing charges for both fuels will see a small rise.  

The price cap is not an overall cap on total bills, but rather a cap on the amount that suppliers can charge per unit of energy. Households that use more than the average amount of gas and electricity will end up paying more than the estimates, while houses that use less will pay less. 

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Who does the energy price cap affect?

Changes to the energy price cap will affect the cost of energy for households who are on:

• Standard variable tariffs (SVTs). These can also be known as standard, default, rolling, flexible, or out-of-contract tariffs. Rates for these tariffs often change directly in line with the energy price cap. 
• Tracker tariffs. A handful of suppliers offer this type of tariff, which guarantees a fixed discount on the price cap, regardless of how it changes. A discount of up to £50 a year is typical. 

The price cap doesn't apply to you if you have signed up to a fixed energy tariff. 

Find out more: What is the energy price cap?

What will my energy cost in January 2026?

The new average rates for variable tariffs for those who pay by direct debit will be:

• Electricity unit rate: 27.69p per kWh (currently an average 26.35p).
• Electricity daily standing charge: 54.75p per day (currently an average 53.68p).
• Gas unit rate: 5.93p per kWh (currently an average 6.29p).
• Gas daily standing charge: 35.09p per day (currently an average 34.03p).

If you have a prepayment meter, you pay the same standing charge as direct debit customers but slightly lower rates per kilowatt hour. 

At the new rates, a typical household, with medium energy use paying by monthly direct debit, can expect to pay around £147 per month for gas and electricity used between January and March 2026. The same typical household currently pays around £146 per month. 

Ofgem sets the price cap and defines medium energy use per year as 11,500kWh of gas and 2,700kWh of electricity.

You'll pay a different amount if you use more or less than this. Note that because electricity costs have increased while gas has decreased, if you do not have a gas supply then these changes are likely to have a bigger impact on your bill.

Below, we've compared the annual energy costs of example households using low, medium and high amounts of energy, paying current rates and the rates that begin on 1 January 2026.

The actual prices you pay for your energy will vary by region and payment method. Different suppliers may split out their unit rates and standing charges differently.

If you are on a variable tariff, your energy supplier should contact you to let you know your new prices before they change.

The price cap doesn't apply if you live in Northern Ireland.

If you have a prepayment meter, your unit rates will be slightly lower than those who pay by direct debit, though your standing charges will be the same.

Should I get a fixed energy deal?

As of November 2025, Ofgem estimates that around 34 million domestic energy accounts are on standard variable tariffs, while around 21 million accounts have fixed deals. Those with fixed deals won’t be affected by changes to the price cap. Most households have two tariffs, one for electricity and one for gas.

When we checked on 31 October 2025, we found around 30 tariffs on the energy market that cost less than the price cap that applies from October to December 2025. Annual savings for the cheapest available fixed tariff were more than £200 for a typical, medium-use household compared with the current price cap. 

Energy suppliers tend to adjust the fixed tariffs they offer more or less in line with the price cap, so if you're currently on a price-capped variable tariff it's worth fixing a deal now before prices start to increase.  

Find out more: See our table of the latest cheap energy deals in our guide on how to get the best energy deal. 

Compare gas and electricity prices today: use our free, independent energy comparison service to find the best provider for you

What if I can't afford my energy bills?

If you're struggling to afford your energy bills, there are several resources available to help you. 

Reaching out to your supplier is the best way to get help. Under Ofgem rules, suppliers must offer payment plans you can afford, and you can also ask for ‘emergency credit’ if you use a prepay meter and can’t top up. Some of the ways suppliers can help you include giving you more time to pay, offering you a payment break or reduction in your payments, and helping you access hardship funds. 

In addition to support from suppliers, there are government schemes designed to help those in need.

If you're not sure what you might be eligible for, head to our guide to getting help if you're struggling to pay your energy bill