The domestic price cap for a typical dual-fuel household paying by direct debit fell from £1,849 in April 2025 to £1,758 for January 2026, Ofgem reported in its State of the Market report published on 27 January 20261. The figure covers the January to March 2026 cap period and reflects lower wholesale costs during the latter half of 20251.
Ofgem said the decline followed an expansion of LNG supply, high European storage and strong renewable output displacing gas-fired generation at peak periods, with carbon allowance prices also softening1. Wholesale costs remain above pre-crisis levels1. For households paying by prepayment meter, the equivalent figure is £1,711 for average consumption1.
The cap figure is a typical-use number, not a maximum bill. Ofgem's own breakdown of a dual-fuel direct debit standard variable tariff for January to March 2026 puts wholesale costs at 37% of the total, network costs at 23%, policy costs at 15%, operating costs at 13%, debt-related costs at 3% and other costs at 9%1. The Energy Saving Trust, using the same cap period, gives a typical Great Britain household around £79 a month for electricity, or £947 a year, and around £72 a month for gas, or £809 a year, assuming 12,000 kWh of gas use2. It puts the January 2026 cap £765 above winter 2020/213.
Debt remains the pressure point in the market. Energy debt and arrears reached £4.48bn in Q3 2025, the twelfth consecutive quarterly increase, with 3.6m customers in debt1. Ofgem is running a statutory consultation on a targeted Debt Relief Scheme designed to write off eligible energy debt accrued during the crisis period1. Tomato Energy has exited the market since the previous report, due to financial resilience issues1. There are 22 active domestic suppliers, and the six largest hold 92% of market share in Q2 20251.
"The domestic price cap for a typical dual-fuel household paying by direct debit fell from £1,849 in April 2025 to £1,758 for January 2026 as wholesale costs eased."
| Measure | Figure |
|---|---|
| Cap, April 2025 | £1,849 |
| Cap, January to March 2026, direct debit | £1,758 |
| Cap, January to March 2026, prepayment | £1,711 |
| Energy debt and arrears, Q3 2025 | £4.48bn |
| Customers in debt | 3.6m |
Why it matters for households
The cap sets the ceiling on standard variable tariffs, so a household that has not moved to a fixed deal is priced against it. Ofgem notes the differential between the cheapest tariff and the cap was approximately £265 as of October 2025, and that fixed-term contract adoption rose to one-third of customers over the past year1. The cap level also shapes what a home pays for the fixed portion of its bill, which is why Ofgem has been examining whether to require suppliers to offer at least one lower or zero standing charge tariff in all regions at all times4. That work is separate from the cap level itself, and Ofgem has said lower or zero standing charge options are not designed as an affordability measure4.
For a household weighing energy independence, the cap figure matters less than the split between unit rates and standing charges, and how much of the bill is fixed regardless of use. Ofgem's own component breakdown shows debt-related costs at 3% of a typical bill1, a cost carried by all consumers. The price cap history shows the level has moved between roughly £1,500 and £2,000 since October 20233.
What happens next
Ofgem expects a further reduction in energy bills for the April to June 2026 price cap period, following the government's Autumn Budget announcement to take an average of £150 off household energy bills1. The next cap announcement is not dated in the sources. On standing charges, Ofgem's working paper set out an aim to publish a statutory consultation in autumn 2025 with a decision by the end of that year, and said that if it decided to implement the policy on that timeline it would expect new tariffs in the market from January 20264. Whether that decision has been taken has not been reported.
Sources4 cited
- Ofgem State of the market report, ofgem.gov.uk
- What is the average UK energy bill? - Energy Saving Trust, energysavingtrust.org.uk
- What do people really think about energy? - Energy Saving Trust, energysavingtrust.org.uk
- Mandating lower or zero standing charge tariffs: A technical working paper, ofgem.gov.uk