The January 2027 energy price cap: forecasts and your bill

Published 23 October 2026. Forecasts checked 23 October 2026.

Forecasts for January ranged from a 16% rise to 26%, which would take a typical household’s annual bill from £1,723 to between £1,999 and £2,171. They rose through October: the suppliers’ average went from 21% in early October to 26% by 21 October 2026. Forecasters put the rise down to wholesale gas, pushed up by conflict in the Middle East disrupting supply, with Europe’s gas storage lower than usual going into winter.

The forecasts

Each is for a typical dual-fuel household paying by direct debit, against the £1,723 October cap. Suppliers update theirs every week or two, and as the table shows, forecasts made weeks ahead can move a long way before the announcement.

What it means for your winter bill

January to March is when a rise bites. Those three months carry about 42% of a gas-heated home’s yearly gas, so a percentage rise costs far more in pounds than it would in summer. Put in your own yearly use to see your quarter; it starts at Ofgem’s typical home, 2,500 kWh of electricity and 9,500 kWh of gas.

Don’t know your yearly use? The electricity and gas analysers work it out from your smart meter download.

Should you fix before the announcement?

A fixed tariff priced today is set from the same wholesale market the forecasts watch, so fixes move with them. Whether one is worth it depends on the gap between the fix and where the cap lands. The safest kind has no exit fees: if the January cap comes in below your fix, you can leave once it’s announced, having paid only the extra until then.

The tariff checker takes the quotes you have and prices each one on your own usage over the next year, under no change, the lower forecast and the suppliers’ forecast, including what leaving early would cost.

Will my direct debit go up?

Possibly, and suppliers often review payments when the cap changes. Whether yours needs to depends on your balance now as much as on the cap. The direct debit checker walks your account through the next twelve months, winter included, and shows what your payment should be under each forecast, and how much credit you could safely ask to have back.

And then April

The temporary zero rate of VAT on electricity ends on 31 March 2027. From 1 April 2027 electricity bills carry 5% VAT again, whatever the April cap does. Few forecasters publish April and July figures; those that do expect the cap to ease slightly in April and more in July, but that far out the uncertainty is larger than the change.

How the cap works

Ofgem sets the cap every three months from the cost of buying energy over an observation period, plus network, policy and operating costs, and announces it about five weeks before it starts. It limits the unit rates and standing charges on standard variable tariffs, not total bills. Fixed tariffs aren’t covered, which is why a fix can be above or below it.

Common questions