Understanding the January 2026 Price Cap & Its Impact on You
Published date: December 2025
Since 2020, energy has become increasingly complicated and expensive. With the rising cost of living affecting millions of people, we know many of our customers are feeling the pressure. That’s why, here at Co-op Energy, we’re committed to giving you clear, jargon-free updates that help you make the best decisions for you and your family, because that’s what being a co-op is all about.
What is the Energy Price Cap?
The energy price cap is set by Ofgem, the energy regulator for Great Britain, and it limits the maximum unit rates and standing charges that suppliers can charge customers on standard variable tariffs.
A few key points about how energy costs are calculated:
- Unit rate: This is the price you pay per unit of energy. On your bill, electricity usually appears in kWh or MWh, and gas appears in cubic metres.
- Standing charge: This fixed daily charge covers the cost of keeping your home connected to the energy network.
It’s also important to know whether you are on a fixed tariff or a standard variable tariff. On a variable tariff, your unit rate and standing charge can change in line with the price cap or wholesale energy market shifts. If that feels unpredictable, switching to a fixed tariff can give you more certainty over your bills.
Headline Change for January 2026
From 1st January to 31st March 2026, the energy price cap for a typical household using electricity and gas and paying by direct debit is £1,758 per year. This is a 0.2% increase from the previous quarter (1st October–31st December 2025), which was £1,755.
While wholesale energy costs have fallen in recent months, the rise in the cap is driven by government policy costs, increased support for warmth initiatives such as the Warm Home Discount scheme, and higher supplier operating costs.
What This Means for You
- Variable tariff customers: Your bills may increase in January, depending on how much energy you use.
- Fixed tariff customers: Check when your current tariff ends. If it is due to end before 1st January, getting in touch with your supplier sooner can help you explore your options. Locking into a new tariff before the start of the year could secure a better rate.
- Meter readings: Providing a meter reading to your supplier before the price cap comes into effect ensures your bills are accurate.
Tips for Saving
- Switch to a fixed-rate tariff with Co-op Energy: This can lock in a stable rate and protect you from future price rises.
- Reduce your energy use: Small changes like switching to LED lighting, turning off lights when leaving a room, or adding draft excluders and window insulation film can help lower consumption.
- Shop around: When comparing energy providers, factor in exit fees and consider renewable energy options. With Co-op Energy’s no exit fees guarantee, you can switch confidently while reducing your carbon footprint.
Your Local Community Energy Group Can Help
Did you know community energy is on the rise? Across the UK, more than 600 groups provide targeted advice to households that need it most. Last year, they supported over 60,000 people through energy efficiency schemes and tailored programmes. Find your local group today and see how they can help you save energy and money.
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