Energy price cap to rise AGAIN in January – here are the best fixed deals to beat it

The energy price cap will increase again in January, but households can save nearly £200 by switching to a fixed deal. 

Experts had predicted a small dip in prices in the new year, but regulator Ofgem confirmed the cap will increase by 0.2 per cent or 28p a month, from £1,755 to £1,758, for a typical dual fuel household.

Some energy firms are offering savings of nearly £200 if you fix your energy bill, which should protect you from a predicted rise in the cap in April too.  

Electricity prices will increase from 26.35p/kWH to 26.69 /kWh, while the price of gas will fall from 6.29p to 3.93/kWh.

Higher non-wholesale costs have offset the lower price of wholesale energy, which has fallen over the past three months, says Ofgem. 

Higher bills: Households will pay more for their energy in 2026 as operating costs soar

This includes funding government policies including the Sizewell C nuclear project, which will add around £1 to monthly bills.

> Read more: Our pick of the best energy deals, updated weekly 

The cost of the extension of the Warm Home Discount scheme will be spread over a longer period to keep bills stable, said Ofgem, which estimates will add another 57p to monthly bills.

The scheme is driving another increase in standing charges, with electricity standing charges increasing 2 per cent to 54.75p per day, and gas up 3 per cent to 35.09p per day.

This is Money analysis shows standing charges have tripled since the introduction of the price cap, from roughly 28p for both gas and electricity to nearly 90p since January 2019.

Expert forecaster Cornwall Insight said it ‘marks the beginning of a potential trend in which non-energy costs could emerge as the primary driver of household energy bills, rather than the wholesale market’.

It means that households will need to brace themselves for a bigger jump in their bills from April.

Cornwall Insight predicts the cap will rise by £57 to £1,815, largely driven by higher charges for operating and maintaining the energy networks.

Even with possible changes coming in the Budget – with rumours of VAT being removed or adjusted levies – customers are likely to pay more.

Dr Craig Lowrey, principal consultant at Cornwall Insight said: ‘These costs will still need to be recovered, whether through bills or through taxes, as the pipes, wires, and networks that keep the lights on still need investment as we move to a cleaner, more secure energy system. 

‘On top of that, policy costs, like support for nuclear projects and schemes to protect vulnerable households all come with a price tag. Shuffling these costs around might make energy bills look lower, but it won’t deliver real and enduring savings for most households.’

The best fixed deals 

With so much uncertainty about where energy prices might be in 2026, Ofgem is telling customers to opt for a fixed tariff to reduce their bills.

Tim Jarvis, director general of markets at Ofgem says that the price cap is ‘only a safety net and there are practical ways that customers can pay less for their energy.

‘Look at different tariffs and choose what’s right for you or change the way you pay to Direct Debit or smart pay-as-you-go. Prepayment remains the cheapest way to pay, and these customers are already saving around £47 on average.’

Customers who switch to a fixed deal can save an average of £185 a year, according so Uswich.

Outfox Energy’s 12-month fixed deal offers an average annual bill of £1,570, which will give you a saving of £188 against January’s price cap.

Richard Neudegg, director of regulation at Uswitch.com, said: ‘Consumers should run a comparison for their usage levels and region. For households able to switch, fixing now at a cheaper rate is the best defence against high winter bills.’