Energy bills rising in January: what the new Ofgem price cap means for your home

Energy bills are going up again from 1 January, and even though the change is small, it still matters when you are already watching every penny.

Ofgem has confirmed the new price cap for 1 January to 31 March 2026, and the rise works out at just 28p per month for a typical household.

It does not sound like much, but when everything else is creeping up too, even tiny increases feel irritating.

This guide explains the new cap in simple terms, so you know what is happening and what you can do about it.

What the new January price cap means

For a typical home using gas and electricity and paying by Direct Debit, the annual bill is now expected to be £1,758 a year.

That is a very small increase of about 0.2% compared with the previous quarter. Ofgem says this works out at roughly 28p more per month.

Compared with the same period last year:

• It is £20 cheaper in cash terms
• It is £37 cheaper in real terms, once inflation is taken into account

The new unit rates from January

These are the average rates for people on a standard variable tariff paying by Direct Debit. They apply across England, Scotland and Wales.

Electricity:
27.69p per kWh
54.75p per day standing charge

Gas:
5.93p per kWh
35.09p per day standing charge

Exact rates may vary slightly depending on your region and supplier.

What the price cap actually controls

The price cap does not set a limit on your total bill. It only limits what suppliers can charge for each unit of gas or electricity, plus the daily standing charge.

Your bill still depends on how much energy you use, where you live and the type of meter in your home. The cap is reviewed every three months, with the next update due in February for April.

Who is covered by the price cap

You are covered if you are on a standard variable tariff.

This includes people paying by Direct Debit, standard credit, prepayment meters and those with Economy 7 meters. If you have a fixed tariff, the cap does not apply until your fix ends.

Because the cap covers several payment types, many people wonder whether one method works out cheaper than another, especially prepayment meters.

Does this mean prepayment meters are cheaper?

Prepayment meters work on a top-up basis. You pay before you use your energy, which can help some households avoid going into debt.

Under the new price cap, the typical prepayment bill is £1,711 a year, compared with £1,758 for someone paying by Direct Debit.

The only reason the prepayment figure looks lower is because Ofgem uses different assumptions about “typical” usage. The unit rates are the same, so it is not genuinely cheaper in real life.

Most homes will not save money by switching to prepayment.

You cannot spread payments across the year, winter costs hit harder and daily standing charges still eat into your balance even when you use very little.

If your credit runs out, your supply stops until you top up again.

So while the headline number is slightly lower, prepayment is not usually the cheaper option. Direct Debit is still the steadier way for most households to manage their bills.

Why the cap is changing

Wholesale energy prices have been fairly steady, but other costs have pushed the cap up.

These include network costs, government policy schemes such as the Warm Home Discount, supplier operating costs and VAT.

These costs are shared between your unit rates and standing charges.

What help is available if you are struggling

If you are finding your bills difficult to manage, suppliers must offer support if you tell them. This could include a repayment plan, support for vulnerable customers or emergency credit for prepayment users.

Ofgem has also announced a Debt Relief Scheme launching in early 2026. It is expected to help around 195,000 people on means-tested benefits by clearing some of their energy debt.

You may also be able to get help from the Warm Home Discount, ECO energy grants, supplier hardship schemes or your local council.

Read next: 10 charities and schemes offering cost of living help this winter

Ways to cut your energy costs

Small changes can make a noticeable difference over time.

Shorter showers, warming only the rooms you use, reducing draughts and turning appliances off properly can all help lower your bills without major effort.

You can also check whether your supplier is offering a fixed deal that suits your home. Fixes are not always cheaper, but they can help with budgeting.

If your supplier is not offering good rates, you can also look at switching to another supplier, as both credit meter and prepayment customers are allowed to switch.

Read next: 50 ways to save money on energy bills without switching

Final word

The January rise is small, but it still adds to the squeeze many homes feel. Understanding how the price cap works helps you spot where you can reduce costs and where to find support if you need it.

You cannot control the rates, but you can control how you use energy and how prepared you are for the next update.