Energy Price Cap Sees Unexpected January Increase
Millions of households across the UK are facing a fresh financial hit after the energy regulator confirmed an unexpected rise in the price cap for the start of the new year.
The quarterly cap for a typical annual dual fuel bill will increase to £1,758 for the period covering January to March 2026. This marks a slight rise from the current quarter's cap of £1,755.
Ofgem, the energy regulator, announced the 0.2% increase on Friday, November 21st. While the nominal rise is small, it comes as a significant blow to families already struggling with the cost of living.
"Cold Comfort" for Families in Fuel Poverty
Charities have reacted with dismay to the announcement, stating that the small change offers little relief. Adam Scorer, the chief executive of National Energy Action, did not mince his words.
"A 1% drop in energy bills is cold comfort," Scorer said. He emphasised that bills "remain impossibly high for millions across the UK, just as they have been for the last four years."
He detailed the severe real-world consequences, noting that people are being forced to ration their heating, cut back on cooking, and are falling into debt while living in cold, damp homes.
Scorer issued a direct plea to the government, pointing out that the upcoming budget falls on Fuel Poverty Awareness Day. He expressed hope that this would spur "the urgent and long-term action needed to deliver affordably warm homes."
Experts Warn of Further Rises and Hidden Costs
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, provided analysis confirming that the cap is holding relatively steady for now. However, he delivered a stark warning about the future.
"Our forecast shows bills climbing again in April," Dr Lowrey stated, clarifying that this anticipated rise is "not because of wholesale energy - it’s down to the non-energy costs that keep the system running and future proofed."
With the Budget approaching, there has been speculation that the Chancellor could intervene by removing VAT or adjusting policy levies to lower bills. Dr Lowrey cautioned that this would be a "zero-sum outcome," as the costs would simply be shifted from bills to general taxation.
He explained that investments in pipes, wires, and networks, along with policy costs for nuclear projects and vulnerable household schemes, all come with a price tag that must be paid.
Despite the immediate pain, Dr Lowrey stressed the long-term importance of these investments, calling a low-carbon system an essential step towards "more energy security and less exposure to the rollercoaster of fossil fuel prices." He concluded that while the critical issue of immediate affordability cannot be ignored, these upfront costs represent an investment in future stability.
