Energy Price Cap: Why January 2027 Could Jump 25%

What is predicted

Ofgem updates the energy price cap every three months. The next level covers 1 January to 31 March 2027 and is based on wholesale prices from the assessment period of 19 August to 17 November 2026. The confirmed figure is published on 25 November 2026.

Until then, the energy analysts at EDF, British Gas and E.On Next publish forecasts. In the week of 14 September 2026, they pointed to a rise of about 24.9%, taking a typical annual bill to £2,152. The main cause they give is higher wholesale gas prices, with the conflict in the Middle East adding pressure.

Forecasts are not guarantees. They have swung by hundreds of pounds within weeks before, and the final number depends on the wholesale market through mid-November. Even so, every major forecaster is currently pointing the same way, and the direction matters more than the exact figure.

Confirmed vs predicted

One number is locked in. The other is a forecast. Keep them separate when you plan.

Confirmed figures from Ofgem. January prediction from the latest forecasts reported by MoneySavingExpert.

Why the cap may jump

The price cap follows the wholesale cost of gas and electricity, so it moves with global markets rather than UK policy. Three things are pushing the January forecast up:

• Wholesale gas prices. Gas is still the marginal fuel that sets UK power prices, so a gas spike lifts electricity too.
• Winter demand. The January quarter is when homes use the most gas, and suppliers buy ahead for the coldest months.
• Global uncertainty. The conflict in the Middle East has added a risk premium to energy markets.

For context, Ofgem's cap has ranged from as low as £979 a year in its first period to a peak of £3,582 in early 2023. At £2,152 it would still sit below that crisis high, but well above the £1,723 you pay now.

What it means for your bill

The headline is £1,723 rising to about £2,152, a jump of £429 a year, or roughly £36 a month. That assumes a household uses 2,500 kWh of electricity and 9,500 kWh of gas, which is Ofgem's typical usage figure.

Every household is different. The cap sets the maximum unit rate and daily standing charge, not your total, so the more gas you use the more of this increase you feel. Homes heated by gas and larger families will pay more than the £36 a month average. Flats and low users will pay less.

The three-month view

The cap is reset every quarter, so a January spike is not necessarily permanent. The same forecasts suggest prices ease later in 2027.

Forecasts as of the week of 14 September 2026, from EDF, British Gas and E.On Next. Predictions move often.

The VAT twist

From 1 October 2026 to 31 March 2027 there is no VAT on electricity. The 5% VAT on gas stays. The January cap falls inside that window, so the predicted £2,152 already assumes electricity is VAT-free.

The support ends on 31 March 2027. If electricity prices have not fallen by then, VAT returning in April will push electricity bills higher again, which is why the predicted April dip is only 1.6%. Ofgem itself warns that the VAT change means you cannot compare the new cap directly with older periods.

What to do before January

1. Check which tariff you are actually on

Log in to your supplier account and look for "standard variable" or a fixed deal with an end date. On a fix, your rates stay put until the deal ends, so your risk is the month you roll off. On a standard variable tariff, the January cap applies automatically, and there is nothing to do.

2. Decide whether to fix before 25 November

If you can find a fix priced below the predicted January level, it can shield you through the winter quarter. Compare unit rates and standing charges, not just the headline annual figure, and check exit fees before you sign. MoneySavingExpert keeps a running price cap prediction and fixed deal guide that is worth a look before you commit.

3. Cut the gas you use for heating

Most of the increase sits in the gas unit rate, and heating and hot water are where gas goes. Turning your boiler flow temperature down, draught-proofing doors and windows, and taking shorter showers cut usage straight away. These changes do more for a winter bill than switching anything electrical.

4. Make your electricity go further

Our air fryer versus oven running cost comparison shows how much smaller appliances save per cook, and the bulb calculator covers the cheapest win of all, swapping old bulbs for LEDs. To price up your own devices, use the energy cost calculator.

5. Check what help you can claim

If the increase stretches you, check whether you qualify for the Warm Home Discount or energy efficiency grants, and ask your supplier to add you to the Priority Services Register if anyone in the home needs extra support. Ofgem lists the routes in its help with your energy bills guidance.

6. Budget for a £36 a month squeeze

Small rises are easy to absorb. £36 a month, or £429 a year, takes planning. Rework your monthly budget now and build a buffer before the heating season. Our complete budgeting guide and emergency fund guide show where to find the money, and the budgeting and debt hub pulls the calculators together in one place.

Key dates

• 17 November 2026: end of the Ofgem assessment period for the January cap.
• 25 November 2026: Ofgem announces the confirmed January to March 2027 cap.
• 1 January 2027: the new cap takes effect for standard variable tariffs.

We track the announcement and other money dates in our UK financial events calendar.