Ofgem Unexpectedly Hikes Energy Price Cap, Raises Bills for 30 Million Households in January

Ofgem has unexpectedly raised the quarterly energy price cap by 0.2% for January–March, taking the typical dual‑fuel household cap to £1,758 a year from £1,755, an increase of roughly 28p a month and affecting more than 30 million households on standard variable tariffs and prepayment meters across England, Scotland and Wales.

“Millions of households will see a slight rise in gas and electricity prices at the height of winter after regulator Ofgem outlined its next price cap”

BBC

Regulators and media outlets said the small rise takes effect from 1 January 2026 and applies to the unit rates and standing charges that underpin bills for households on default tariffs.

BBC

The regulator added that wholesale prices have fallen about 4% over three months but remain volatile, and the cap has nonetheless been nudged higher for the winter quarter.

Officials and analysts say small rises in standing charges, government policy costs and changes in calculation methods are the immediate drivers rather than a spike in wholesale energy prices.

Ofgem and multiple outlets noted that wholesale costs have been broadly stable and down about 4% over three months.

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The cap rise reflects factors such as higher standing charges (electricity +2%, gas +3% cited by industry commentators), temporary costs linked to the Warm Home Discount and a change in how average usage is calculated for the typical household.

Regulator guidance and industry commentary emphasised consumer measures and support.

“Keir Starmer brands Nigel Farage 'spineless' over MPs 'racist' TV ad outburst GB NEWS Analysts had previously forecast the Ofgem energy price cap to fall between January and March 2026 Ofgem has confirmed the energy price capwill rise in 2026 despite previous forecasts predicting a fall in the first quarter of next year”

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Ofgem urged people to shop around and switch payment methods and suppliers where possible.

It noted that around eight million households could save roughly £136 a year by moving from standard credit to direct debit.

Prepayment customers are saving about £47 on average.

The regulator also highlighted existing support schemes such as the £150 Warm Home Discount and energy-efficiency programmes.

It introduced rules requiring suppliers to offer tailored repayment plans, extra financial help and debt advice to struggling customers.

Charities and Citizens Advice warned the small cap rise will make for another tough winter and urged the government to shift some policy costs onto general taxation and to invest in energy efficiency.

Opposition politicians blamed net-zero policies and green levies for putting upward pressure on bills.

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Local campaigners highlighted the cumulative burden, saying average bills remain hundreds of pounds higher than previous winters and calling for Budget action to fund long-term measures to cut costs.

Analysts warn the outlook could change in the spring.

“The average annual energy bill is expected to rise by 0”

ITVX

Cornwall Insight currently predicts bills may rise in April because of higher network operation and maintenance charges, though forecasts could change before the formal April cap announcement, which Ofgem said it will publish by 25 February 2026.

ITVX

Observers advised households to check tariffs, consider fixed deals and take accurate year-end meter readings to avoid bill surprises as seasonal usage rises.