Energy Price Cap January 2027

Energy bills are forecast to rise sharply on 1 January 2027. The cap running now, from 1 October to 31 December 2026, is £1,723 a year for a typical dual-fuel household paying by monthly Direct Debit. Every major forecast for the January–March 2027 quarter puts it somewhere between £1,999 and £2,115, a rise of about 16% to 23%.

Cornwall Insight, the consultancy most often quoted on price cap forecasts, calls it “the biggest price cap rise we've seen in four years”. If it lands anywhere near the forecasts, January's cap would be the highest since March 2023. It also arrives in the coldest months of the year, when households use the most energy.

Remember that “typical” means a home using 2,500 kWh of electricity and 9,500 kWh of gas a year (Ofgem's typical usage figures from July 2026). Your own bill will move by roughly the same percentage, but the pound figure depends on how much energy you use.

Cornwall Insight's £1,999 is the lowest figure, and the newest. It splits into about £959 for electricity and £1,040 for gas, with unit rates of roughly 30.28p/kWh for electricity (up from 26.32p) and 9.76p/kWh for gas (up from 7.97p). Cornwall's previous forecast, on 26 August, was £1,872, so its figure has risen by more than £100 in five weeks as gas prices climbed.

The suppliers' figures, published a few days earlier, are higher. British Gas, EDF and E.ON Next all landed at roughly 20–23%, and MoneySavingExpert's average of the three is £2,085. We use about £2,060 as our central figure, which sits between Cornwall and the suppliers. Our news story on Cornwall's latest forecast explains why the range narrowed, and the price cap predictions tracker logs each new forecast as it's published.

How much should you trust them? Cornwall's final forecast for October was £1,709; Ofgem confirmed £1,723, just £14 out. But that was a final forecast, made after the assessment window had closed. January's window is still open, so these numbers can still move by tens of pounds either way. Cornwall says a rise is “all but certain” because the wholesale price increases seen in September are already locked into the calculation. What's still uncertain is how big the rise will be.

For a typical household the central forecast adds about £28 a month. Because January to March are the heaviest months for heating, you'll feel it more than a twelfth of the annual figure suggests. A Direct Debit set evenly across the year should rise by about that much. A pay-as-you-go or quarterly bill will show a bigger jump over the winter months.

Gas-heated homes take the bigger hit. On Cornwall's numbers, the typical gas bill rises about £175 (from roughly £865 to £1,040) while the electricity bill rises about £100 (from roughly £858 to £959). The gas unit rate goes up more than a fifth; the electricity unit rate goes up about 15%. If you heat with gas and use more than 9,500 kWh a year, expect your rise to be above the headline percentage.

Want your own figure rather than a band? Our savings calculator runs your actual usage at today's rates and shows what the January forecast would add.

The short answer is wholesale gas. Prices have climbed with the conflict in the Middle East, and suppliers pay those wholesale prices to buy the energy they sell you. Ofgem's cap is designed to let them pass genuine costs on, so when wholesale prices rise for long enough, the cap follows.

Gas affects your bill in two ways:

• Directly, through the gas unit rate you pay for heating and hot water
• Indirectly, because gas-fired power stations often set the wholesale price of electricity, so electricity rises too, just by less

The cap also runs on a delay. It isn't set from prices on the day it starts. It's calculated from costs observed during an assessment window from mid-August to mid-November. Prices that rose in September are therefore already part of January's calculation, whatever happens next. That's why the forecasters are so confident there will be a rise, and less confident about how big it will be.

What about the VAT cut? VAT on domestic electricity dropped from 5% to 0% on 1 October 2026 and stays at 0% until 31 March 2027. That's real help, but it was already priced into October's £1,723, and the January forecasts assume 0% VAT on electricity too. It gives no further relief in January. Gas keeps its 5% VAT throughout. Our electricity VAT cut guide has the details.

You don't need to do anything for the new cap to apply. If you're on a standard variable tariff, including Flexible Octopus, your supplier will move you onto the new rates on 1 January and should tell you about the change beforehand.

Fix or not? A fix is effectively a bet that the cap will average more than the fixed price over the next 12 months. January to March looks likely to be above £1,817, but nobody can forecast April 2027 onwards with any confidence. If a sudden £28-a-month jump would hurt your budget, the certainty is worth paying for. If you can absorb some ups and downs, staying variable keeps your options open. Our fix or variable guide works through the maths in more detail. Martin Lewis's advice is to compare the whole market before you fix.

Whichever you choose, these are worth doing before 1 January:

• Check for the Warm Home Discount. It's £150 off your electricity bill, paid between November 2026 and 31 March 2027. The qualifying date was 23 August, and most eligible households get it automatically. Our Warm Home Discount guide explains who qualifies.
• Take a meter reading on 31 December. Submit it so that December's usage is billed at October's lower rates rather than estimated across the change. Photograph the meter in case of a dispute later.
• Check when your current fix ends. If it ends this winter, you'll roll onto a variable tariff at the new cap unless you choose something else. No supplier can charge you an exit fee in the last 49 days of a fix, so you can switch without penalty in that window.
• Bank the £50 switching credit. Unlike the forecasts, the £50 is certain. You get it on Flexible Octopus, the fixes and the smart tariffs alike.