Energy bills set to slightly increase in January, Ofgem announce – everything you need to know about the latest price cap

This morning (21 November), Ofgem has announced that households will see a slight increase in their energy bills, as the energy regulator has announced a 0.2% rise in the price cap for the period covering January to March 2026.

As the temperatures have plummeted this week, more and more of us are looking to save energy at home, and the increase, albeit small, makes now just as good a time as any to ensure your home habits are well-equipped to save the pennies where they can.

In real terms, households can expect to see their bills rise by 28p per month on average, following the £35 yearly increase of the October price cap. This is everything you need to know, and how it will really affect you.

The January 2026 price cap refers to the default tariff applied when a customer is not on a fixed-rate tariff - something to consider if you’re trying to decide whether to fix your tariff or not. The price cap sets a maximum rate per unit and a standing charge that can be billed to customers.

For an average household paying by Direct Debit for gas and electricity, this means their annual bill for the year is expected to be £1,758 - an annual increase of £3.

While it is true that bills will see a slight increase as a result of the new cap, Ofgem states that year on year, when adjusted for inflation, bills are £37 (2%) lower than the same period of 2025.

‘While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets,’ commented Tim Jarvis, Director General, Markets, at Ofgem.

‘The price cap helps protect households from overpaying for energy. But it’s only a safety net, and there are practical ways that customers can pay less for their energy.

‘Look at different tariffs and choose what’s right for you or change the way you pay to Direct Debit or smart pay-as-you-go. Prepayment remains the cheapest way to pay, and these customers are already saving around £47 on average.

‘While wholesale energy costs are stabilising, they still make up the largest portion of our bills which leaves us open to volatile prices. That’s why we’re working with government and industry to boost clean energy and reduce our reliance on international sources we can’t control.’

While the increase amounts to only 28p per month on average, it is still a good idea to adopt some energy-saving measures around the home. For example, Martin Lewis’s ‘tactical’ 4 pm rule - which is as simple as closing the curtains when it gets dark - is great for trapping heat in your home, while other home maintenance tasks, such as bleeding your radiators and booking in an annual boiler servicing, can all help ensure your heating system is working as efficiently as possible. Even small changes can make a big difference when it comes to bills.

If you’re worried about paying your energy bills or water bills, speak to your supplier or even an independent body, like Citizens Advice, who can talk you through your options, or explain any benefits you may be eligible for.