Energy Price Cap Explained: Current Rates and The January 2027 Forecast
Household energy prices in the UK are predicted to rise to almost £2,000 for a typical household this winter, as the impact of conflict in Middle East and russia-Ukraine war continues.
The energy price cap is £1,723 a year for a typical household paying by Direct Debit, from 1 October to 31 December 2026. That’s £60 more than over the summer, or roughly £5 a month.
According to analysts, January looks worse. Energy consultancy Cornwall Insight forecasts a 16% jump to £1,999 from 1 January 2027, which would be the biggest rise since January 2023. On 25 November 2026 Ofgem will confirm the January cap.
This guide covers what the cap limits, the rates you’re paying right now, what January could cost you, and whether it’s worth fixing before then.
| Key number | Figure |
| Typical annual bill now (1 Oct – 31 Dec 2026) | £1,723 |
| Change since July–September | +£60 a year (+4%) |
| Forecast for 1 Jan – 31 Mar 2027 (Cornwall Insight) | £1,999 (+16%) |
| Date Ofgem confirms the January cap | 25 November 2026 |
“Typical annual bill” means a home using 2,500 kWh of electricity and 9,500 kWh of gas a year.
What is the energy price cap?
The energy price cap is the most a supplier in England, Scotland or Wales can charge per unit of gas and electricity, plus the daily standing charge, if you’re on a standard variable tariff. Ofgem, the energy regulator, resets it every three months.
The name “energy price cap” raises a lot of questions. It’s not a cap on your total bill. You can use more energy and you pay more, with no upper limit.
The capped part of your bill is made up of two charges:
- Unit rate: what you pay for each kilowatt hour (kWh) you use
- Standing charge: a fixed daily fee for being connected to the grid, which you pay even on days you use nothing
The exact cap that applies to you depends on where you live, how you pay, whether you use gas, electricity or both, and what type of meter you have.
Who it covers, and who it doesn’t
Ofgem’s latest figures put about 20 million households on standard variable tariffs. Roughly 12 million pay by Direct Debit, 5 million use prepayment meters and 3 million pay when the bill arrives (standard credit). Another 11 million or so are on fixed deals.
The cap doesn’t protect you if you:
- are on a fixed tariff, because your rates are locked until the deal ends
- have a business energy contract
- get your heat from a heat network, or use heating oil, LPG or another off-grid fuel
- live in Northern Ireland, where prices are regulated separately by the Utility Regulator
The cap has been around since January 2019. It was brought in to stop loyal customers being quietly overcharged on poor-value default tariffs, and it only became a household name when wholesale prices exploded in 2022.
Energy price cap rates now (1 October to 31 December 2026)
If you pay for your energy by Direct Debit, the cap averages 26.32p per kWh for electricity and 7.97p per kWh for gas. On top of that come daily standing charges of 54.83p for electricity and 29.68p for gas.
| Average Direct Debit rate | 1 Jul – 30 Sep 2026 | 1 Oct – 31 Dec 2026 | Change |
| Electricity unit rate | 26.11p per kWh | 26.32p per kWh | +0.8% |
| Electricity standing charge | 57.19p a day | 54.83p a day | −4.1% |
| Gas unit rate | 7.33p per kWh | 7.97p per kWh | +8.7% |
| Gas standing charge | 29.04p a day | 29.68p a day | +2.2% |
These are averages across England, Scotland and Wales. Gas prices include 5% VAT; electricity carries no VAT from 1 October 2026 to 31 March 2027.
Electricity looks almost flat, but that’s the VAT cut doing the heavy lifting. Take VAT out of the summer price and the underlying electricity unit rate rose by about 6%, by our maths. Ofgem says the VAT change knocked around £45 off the typical bill, and homes with no gas supply will see a rise of less than 1%.
How you pay changes your cap
| Payment method | Typical annual bill under the cap (Oct–Dec 2026) |
| Prepayment meter | £1,678 |
| Monthly Direct Debit | £1,723 |
| Standard credit (cash, cheque or quarterly bill) | £1,861 |
Prepayment is the cheapest way to pay this quarter, at about £45 a year less than Direct Debit. Paying when the bill lands costs roughly 8% more, because suppliers are allowed to recover the extra cost of billing and chasing payment.
Energy price cap rates by region
Where you live matters more than most people realise, mostly because of standing charges. At typical use, a Direct Debit bill ranges from £1,672 a year in the East Midlands to £1,805 in Merseyside and North Wales.
| Region | Electricity unit rate (p/kWh) | Electricity standing charge (p/day) | Gas unit rate (p/kWh) | Gas standing charge (p/day) | Typical annual bill |
| Merseyside and North Wales | 27.86 | 67.66 | 7.91 | 30.08 | £1,805 |
| South West England | 26.58 | 55.58 | 8.12 | 29.31 | £1,746 |
| South Wales | 26.55 | 55.41 | 8.09 | 29.96 | £1,744 |
| South East England | 26.88 | 52.32 | 8.05 | 29.26 | £1,735 |
| South Scotland | 26.11 | 61.41 | 7.87 | 29.89 | £1,734 |
| Yorkshire | 25.60 | 61.67 | 7.90 | 29.77 | £1,724 |
| North East England | 25.46 | 61.58 | 7.92 | 29.79 | £1,722 |
| Southern England | 26.47 | 47.81 | 8.17 | 29.16 | £1,719 |
| North Scotland | 26.35 | 55.14 | 7.87 | 29.87 | £1,717 |
| Eastern England | 26.61 | 51.84 | 7.91 | 29.34 | £1,713 |
| West Midlands | 25.60 | 57.23 | 7.90 | 29.71 | £1,708 |
| London | 26.60 | 42.92 | 8.15 | 30.20 | £1,706 |
| North West England | 26.49 | 45.68 | 7.86 | 29.81 | £1,684 |
| East Midlands | 25.36 | 51.45 | 7.82 | 29.41 | £1,672 |
Standing charges alone average about £308 a year for a dual-fuel home, before you’ve boiled a kettle. That’s roughly £267 in London and £357 in Merseyside and North Wales, because the cost of running local pipes and wires differs by region. Ofgem had planned to make every supplier offer at least one low standing charge tariff by early 2026, but the rollout slipped and only some suppliers are trialling them so far.
How to work out your own bill under the cap
The £1,723 headline is only an average for a “typical” home, so the quickest way to know your real cost is to use your own numbers. You need two things: how many kWh you use in a year, and your region’s rates from the table above.
Work out electricity and gas separately, then add them together:
Annual cost = (kWh used per year × unit rate) + (365 × daily standing charge)
Here’s the sum for a typical home at the national average Direct Debit rates:
| Usage cost | Standing charge | Total | |
| Electricity | 2,500 kWh × 26.32p = £658.00 | 365 × 54.83p = £200.13 | £858.13 |
| Gas | 9,500 kWh × 7.97p = £757.15 | 365 × 29.68p = £108.33 | £865.48 |
| Both | £1,723.61 |
Your annual statement, or your supplier’s app, will show how many kWh you’ve used over the last 12 months. If you’ve moved recently or your readings have been estimated, take a meter reading now and again in a month to get a rough feel for your usage.
One thing that catches people out: you don’t use energy evenly across the year. Most gas goes on heating, so a January to March bill will be far bigger than a quarter of the annual figure. That’s why the January price change matters more than an autumn one of the same size.
What January 2027 forecast rates look like
Forecasts move almost daily with the wholesale market, so treat these with a pinch of salt rather than a promise. Cornwall Insight publishes the unit rates and standing charges behind its forecast. Gas takes the bigger hit, while standing charges barely move.
| Average Direct Debit rate | Now (Oct–Dec 2026) | January forecast (Cornwall Insight) | Change |
| Electricity unit rate | 26.32p per kWh | 30.28p per kWh | +15% |
| Electricity standing charge | 54.83p a day | 55p a day | Flat |
| Gas unit rate | 7.97p per kWh | 9.76p per kWh | +22% |
| Gas standing charge | 29.68p a day | 31p a day | +4% |
What January could cost your household
We ran four common household types through today’s average rates and Cornwall Insight’s forecast rates. The typical-home row uses Ofgem’s and Cornwall Insight’s own headline figures.
| Household (yearly use) | Now (Oct–Dec 2026) | January forecast | Extra per year | Extra per month |
| Small flat (1,800 kWh electricity, 6,000 kWh gas) | £1,260 | £1,445 | +£184 | +£15 |
| Typical home (2,500 kWh electricity, 9,500 kWh gas) | £1,723 | £1,999 | +£276 | +£23 |
| Larger family home (4,000 kWh electricity, 15,000 kWh gas) | £2,557 | £2,989 | +£432 | +£36 |
| All-electric home, no gas (4,200 kWh electricity) | £1,306 | £1,473 | +£167 | +£14 |
These are annual figures, as if the rates held for a whole year. The January cap only runs for three months, but they’re the three months when most homes use the most energy, so the cash hit will feel bigger than the monthly average suggests.
When will we know for sure?
Ofgem announces the January to March cap on 25 November. It sets the wholesale part of the cap using prices from a fixed observation window, which for January runs from 19 August to 17 November 2026.
Cornwall Insight says the price spikes seen in September are already baked in, so a January rise is all but certain. How big it ends up depends largely on how the US–Iran conflict develops over the next few weeks.
The government could still soften the blow. Cornwall Insight has pointed to the Autumn Budget on 28 October as a possible moment for further help, beyond the electricity VAT cut already in place.
Will energy prices go down after January?
Potentially but not quickly, if the early forecasts are right. The same supplier average puts April to June 2027 at £2,061, only 1.2% lower than January, with a bigger drop to £1,876 pencilled in for July. It’s worth noting that forecasts that far out are guesswork, though, and could shift a long way in either direction.
Why are energy prices going up again?
In a word: gas. Ofgem says the October rise reflects higher wholesale gas prices caused by the conflict in the Middle East, with wholesale costs up 11% in the three months before it set the cap.
Britain still leans heavily on gas, both to heat homes and to generate power. Gas-fired power stations set the wholesale price of electricity much of the time, which is why electricity costs follow gas upwards even though more of our power now comes from wind and solar.
The bigger worry is storage. EU gas stores were only around 65% full at the start of September, their lowest level for that time of year in 15 years. Wholesale prices briefly hit a four-year high in early September before falling back.
That could drag on beyond this winter. If Europe comes out of the cold months with low stocks, it will need to buy more gas next summer to refill them, which tends to push prices up again. Cornwall Insight reckons that even if the conflict ended tomorrow, the supply disruption would take months to unwind.
Some perspective helps. Ofgem points out that prices are still about half (52%) below the peak of the 2022 energy crisis. Adjusted for inflation, though, the October cap is 7% higher than a year ago.
How Ofgem calculates the price cap
The cap is built up from the costs a supplier faces, plus a small allowed profit. Wholesale energy is by far the biggest slice, which is why the cap lurches whenever global gas prices do.
| Cost | What it covers | Rough share of a typical bill |
| Wholesale energy | Gas and electricity bought on the open market | About 45% |
| Network costs | Building, maintaining and running the pipes and wires | About 25% |
| Operating costs | Billing, customer service, metering, the smart meter rollout and bad debt | About 16% |
| Policy costs | Government social and environmental schemes, such as the Warm Home Discount | About 6% |
| Supplier earnings | An allowed margin before interest and tax | About 2.5% |
| Other allowances | Headroom for unexpected costs, payment-method costs, and keeping prepayment and Direct Debit standing charges level | Small |
| VAT | 5% on gas; 0% on electricity until 31 March 2027 | Varies |
The observation window
Ofgem doesn’t use today’s wholesale prices. It looks at prices over a fixed observation window that ends about a week before each announcement. For January, that window runs from 19 August to 17 November 2026.
This lag is why bills can keep climbing after wholesale prices have started to fall, and why a spike can take a few months to reach your bill. The cap changes four times a year, on 1 January, 1 April, 1 July and 1 October.
Why £1,723 isn’t comparable with older headlines
In July 2026, Ofgem cut its estimate of how much energy a typical home uses, by about 7% for electricity and 17% for gas. “Typical” is now 2,500 kWh of electricity and 9,500 kWh of gas a year.
That makes the headline look smaller, even though it nudges unit rates up slightly, because some fixed costs are now spread over fewer units. Measured the old way, October’s cap would be £1,935 rather than £1,723. So, if you’ve seen older articles quoting caps closer to £2,000, they were describing a bigger “typical” home, not cheaper energy.
Energy price cap history
On a like-for-like basis, today’s cap is exactly where it was at the start of 2024, and about £150 a year higher than this time last year. The July 2026 jump of 12.6% was the biggest quarterly rise since early 2023.
| Period | Typical annual bill (Direct Debit) | Change on previous quarter |
| Jan–Mar 2027 (forecast) | £1,999 to £2,085 | +16% to +21% |
| Oct–Dec 2026 | £1,723 | +3.6% |
| Jul–Sep 2026 | £1,663 | +12.6% |
| Apr–Jun 2026 | £1,477 | −6.8% |
| Jan–Mar 2026 | £1,584 | +0.5% |
| Oct–Dec 2025 | £1,576 | +2.3% |
| Jul–Sep 2025 | £1,541 | −6.9% |
| Apr–Jun 2025 | £1,655 | +6.0% |
| Jan–Mar 2025 | £1,561 | +1.2% |
| Oct–Dec 2024 | £1,543 | +9.1% |
| Jul–Sep 2024 | £1,414 | −7.0% |
| Apr–Jun 2024 | £1,521 | −11.7% |
| Jan–Mar 2024 | £1,723 | +5.0% |
| Oct–Dec 2023 | £1,641 | −7.1% |
| Jul–Sep 2023 | £1,766 | −36.1% |
| Apr–Jun 2023 | £2,762* | −22.9% |
| Jan–Mar 2023 | £3,582* | +20.5% |
| Oct–Dec 2022 | £2,972* | – |
*The government’s Energy Price Guarantee was in force, so nobody paid the full cap.
All figures are restated on Ofgem’s current typical-use measure (2,500 kWh of electricity, 9,500 kWh of gas), so they compare directly with today’s £1,723. The forecast row shows the Cornwall Insight and supplier-average forecasts covered above.
The all-time peak came in January to March 2023, at £3,582 on today’s measure. That’s £1,859 more than now, which is where Ofgem’s “52% below the peak” comparison comes from.
Should you fix your energy tariff?
With a big January rise forecast, fixing looks more attractive than it has for a while. Ofgem itself says some fixed deals are £100 or more below the October cap.
Nobody knows for certain where prices will go, so here’s the rough maths rather than a verdict. If the supplier forecasts are right, the cap would average about £1,936 over the next four quarters for a typical home.
How to compare a fix against the cap
- Find your current rates. Your bill or app shows your unit rates and standing charges. If you’ve never switched, or your last fix ended, you’re almost certainly on a capped tariff
- Compare rates, not just the headline. Check the fix’s unit rates and standing charges against yours at your own usage. A low standing charge suits low users; a low unit rate matters more if you use a lot
- Check the exit fees. Many fixes charge £50 to £75 per fuel to leave early. A small exit fee is your escape hatch if prices fall
- Think about length. Right now, 18 and 24-month fixes are often £30 to £50 cheaper than one-year deals, but nobody forecasts prices reliably that far ahead
- Look at the alternatives. Some suppliers offer variable tariffs priced below the cap, or trackers that knock a set amount off the cap for a year
When fixing might not suit you
- You’re planning to move home soon, and the deal can’t move with you
- You use very little energy, so a standing-charge discount could save more than a lower unit rate
- You can shift a lot of usage to off-peak hours, in which case a time-of-use tariff may beat a standard fix
If you do switch, it normally takes a few working days and your supply isn’t interrupted. This guide isn’t financial advice, so compare deals for your own usage and region before you commit.
Help if you’re struggling with energy bills
If you’re worried about paying, don’t wait for the January bill to land. Several schemes pay out automatically this winter, and your supplier has to help if you ask.
| Scheme | What you get | Who it’s for | Do you need to apply? |
| Warm Home Discount | £150 off your electricity bill, or a top-up voucher if you prepay | Households on certain means-tested benefits or Pension Credit in England, Wales and Scotland | Usually automatic; some people in Scotland apply to their supplier. Reopens October 2026 |
| Winter Fuel Payment | £100 to £300 | Most people born on or before 27 June 1960 who live in England or Wales. HMRC takes it back if your income is over £35,000 | Usually automatic, paid in November or December 2026 |
| Cold Weather Payment | £25 for each 7-day spell averaging 0°C or below, from 1 November 2026 to 31 March 2027 | People on certain benefits in England, Wales and Northern Ireland | Automatic |
| Priority Services Register | Free extra support, such as advance warning of planned power cuts | Older and disabled people, those with long-term health conditions, families with young children and others who need extra help | Ask your supplier |
Scotland runs its own versions: a Pension Age Winter Heating Payment instead of the Winter Fuel Payment, and an annual Winter Heating Payment instead of Cold Weather Payments.
Talk to your supplier early if you’re falling behind. They must help if you ask, for example by setting up an affordable repayment plan or giving emergency credit on a prepayment meter. Many of the bigger suppliers also run hardship funds that can clear some or all of an energy debt.
Your council may be able to help as well. In England, councils now run the Crisis and Resilience Fund, which replaced the Household Support Fund in April 2026 and can help with essentials like energy bills; you don’t have to be on benefits to ask. Scotland has the Scottish Welfare Fund and Wales the Discretionary Assistance Fund.
If energy bills are part of wider money worries, free and confidential debt advice is available from Citizens Advice, StepChange and National Debtline.
One important warning: these payments arrive automatically. Treat any text, email or call asking for your bank details to “claim” energy support as a likely scam.
Key energy price cap dates
The next date to circle is 25 November, when Ofgem confirms the January cap. Ofgem says it can publish earlier if outside events force its hand.
| Date | What happens |
| 28 October 2026 | Autumn Budget, a possible moment for extra help with bills |
| 1 November 2026 | Cold Weather Payment season starts |
| November–December 2026 | Most Winter Fuel Payments are paid |
| 25 November 2026 | Ofgem announces the cap for 1 January to 31 March 2027 |
| 1 January 2027 | New cap takes effect |
| 23 February 2027 | Ofgem announces the cap for 1 April to 30 June 2027 |
| 31 March 2027 | Electricity VAT cut due to end; Cold Weather Payment season closes |
| 1 April 2027 | New cap takes effect |
| 26 May 2027 | Ofgem announces the cap for 1 July to 30 September 2027 |