UK January 2026 Home Energy Price Cap News Update

What is happening to the home energy price cap in January 2026?

From 1 January 2026, the Ofgem domestic energy price cap will be updated again, directly affecting what most households in England, Scotland and Wales pay for gas and electricity. The cap limits the unit rates and standing charges that suppliers can charge customers on a standard variable tariff (SVT), not the total bill. Your actual bill will still depend on how much energy you use.

This January 2026 home energy price cap update is particularly important for households who:

• Are currently on a supplier's standard variable tariff
• Have recently rolled off a fixed deal onto the capped tariff
• Are unsure whether to fix their prices or stay on the cap going into 2026

On this page we explain how the new cap works, what it could mean for your monthly payments, and how you can use the January 2026 changes as an opportunity to review your home energy options.

How the January 2026 Ofgem price cap works for homes

The Ofgem price cap is reviewed regularly and sets a maximum average price per kWh of gas and electricity, plus a maximum daily standing charge, for standard variable tariffs. It does not cap your total bill.

For January 2026 the cap level is based on:

• Wholesale gas and power costs over the previous months
• Network and operating costs
• Environmental and social obligation costs
• A controlled supplier profit margin

Most direct debit and smart meter customers pay by unit rate (pence per kWh) and a daily standing charge. When Ofgem changes the cap, suppliers can update these rates, and you will see the impact on your bills from your first statement covering January 2026 usage.

If you are on a fixed tariff, your unit rates are already agreed for the length of the contract, so you may not be affected immediately by the January 2026 home price cap update. However, it is still worth understanding the new level so you can compare it to your current deal.

What the January 2026 energy price cap means for your bills

The January 2026 home energy price cap will change both electricity and gas prices for millions of households. Whether your costs go up or down depends on how the new cap compares to the current one and how you pay for your energy.

If you are on a standard variable tariff

Most homes on standard variable tariffs will see their bills move in line with the new capped rates. If the January 2026 cap falls, you may benefit from lower costs per kWh and/or a slightly lower daily standing charge. If the cap rises, your bills are likely to increase unless you reduce your usage.

If you are on a fixed tariff

If you fixed your prices before January 2026, you will keep paying your agreed rates until your fixed term ends. However, the new cap level is a useful benchmark. If the cap is now lower than your fixed rate, you may want to review options when your fix ends or check whether any exit fees apply if you consider switching early.

If you use a prepayment meter

Prepayment customers are also covered by the price cap. The January 2026 update may change how much energy you get for each top-up. Keeping track of the new rates can help you budget more accurately for winter 2025/26 and beyond.

Should you fix your home energy ahead of the January 2026 cap?

With another cap change in January 2026, many households are asking whether to stay on the capped tariff or move to a fixed deal. The right answer depends on your circumstances, risk appetite and how you use energy.

Reasons to stay on the price cap

• You want to benefit automatically if future caps fall later in 2026.
• You do not want to commit to a fixed term with potential exit fees.
• You prefer flexibility and are keeping an eye on the market for better deals.

Reasons to choose a fixed tariff

• You value bill certainty and want to know exactly what you will pay per kWh.
• You are concerned that wholesale prices and future caps could rise again after January 2026.
• You have a high-usage home and want to protect your annual costs from volatility.

Before making a decision, compare the unit rates and standing charges on any fixed offer against the January 2026 price cap level. Checking side-by-side helps you understand whether you would pay more for stability or potentially save compared to the capped tariff.

How to reduce your home energy costs in 2026

Even with a regulated price cap, energy can still be a major monthly cost. There are practical steps every household can take to cut usage and make the most of any price changes in January 2026.

1. Check you are on the right tariff

Many homes roll onto a default tariff when a fixed deal ends, often without realising it. Reviewing your tariff around each cap change ensures you are not overpaying compared with other available options from your existing supplier or the wider market.

2. Improve your home's efficiency

• Upgrade to LED lighting and energy-efficient appliances where possible.
• Use smart thermostats and heating controls to avoid wasting heat.
• Improve insulation in lofts, walls and draughty areas to retain warmth.

These changes reduce the number of units (kWh) you use, so you pay less even if the January 2026 price cap level remains high.

3. Monitor your usage

If you have a smart meter, regularly check your in-home display or online account to see how much you are using each day. Small habit changes in peak times can make a visible difference to monthly bills.

Understanding your bill under the January 2026 cap

When the new cap takes effect, your first bill covering January 2026 usage can be a useful point to review your costs. Pay close attention to:

• Unit rates (pence per kWh) for electricity and gas.
• Standing charges (pence per day) for each fuel.
• The total kWh consumed for the billing period.
• Any estimated readings versus actual readings.

If your bill seems higher than expected after the January 2026 change, check that the new rates match your supplier's published prices and query any discrepancies directly with them.

Will the home energy price cap continue after 2026?

The Ofgem price cap was introduced as a temporary measure but has been extended several times. As of the January 2026 update, it continues to play a central role in protecting households on default tariffs from unfair pricing.

However, the energy market is evolving, and there may be further changes to how prices are regulated, how households pay for standing charges, and how low-carbon technologies are supported. Staying informed about future consultations and announcements from Ofgem can help you plan for any longer-term shifts beyond 2026.

Frequently asked questions about the January 2026 price cap

Does the price cap limit my total bill?

No. The cap limits what suppliers can charge per unit of energy and for standing charges, not the total you pay. Using more energy will still increase your overall bill.

Is every UK home covered by the cap?

The cap applies to most households on standard variable and default tariffs in England, Scotland and Wales. It does not apply to Northern Ireland, off-grid fuels (like oil or LPG) or certain specialist tariffs.

Can my supplier charge more than the cap?

Suppliers cannot charge more than the cap for customers who are covered by it. However, you may pay different rates on fixed deals or certain premium products, so always check your tariff details.

What if I am struggling to pay my bill?

If the January 2026 changes still leave you finding it hard to manage your bills, contact your supplier as early as possible. They may offer support options, payment plans, or direct you to hardship funds and government schemes.