Image credit: Getty
Energy bills rose for millions of households earlier this autumn following a 4% increase in the influential ‘price cap’ that’s set by the UK’s energy watchdog.
The bad news is that worse could be yet to come on this front for consumers over the next few months.
Especially those who have not taken steps to ringfence their energy bills, or households that are eligible for help with their payments but do not take up the offer of support that’s available.
In the run-up to this year’s Budget, speculation has grown about a package of energy support being included as part of the chancellor’s announcements.
But nothing has been confirmed at the time of writing. Instead, with a potentially expensive winter looming – especially if the weather turns extra cold for prolonged periods – here’s currently how best to keep a lid on soaring energy bills.
What’s on this page?
The so-called price cap was introduced in 2019 by Ofgem, the UK’s energy regulator.
From a consumer’s perspective, it’s important because it sets the maximum amount that energy companies are allowed to charge each year for gas and electricity per kilowatt hour (kWh) of usage. This is known as the ‘unit rate’.
The cap also covers a maximum daily standing charge which essentially covers the cost of getting power to your home. You pay a standing charge regardless of the amount of energy you use. And even if you don’t use any energy at all.
The cap is reviewed every three months (in January, April, July and October) and is altered to reflect movements in wholesale energy costs.
For example, when prices rise due to supply disruption because of the Middle East conflict, along with other charges that affect the management of the UK’s energy network.
The energy price cap figure is often quoted in the news. This is the amount a typical household expects to pay for its energy over a 12-month period assuming it is on a variable rate tariff, paying bills by direct debit and based on ‘average consumption’.
From July 2026, average consumption has meant 9,500 kWh of gas and 2,500 kWh of electricity a year.
Note that the cap refers to a limit on the unit energy price. It’s NOT the maximum amount a household can expect to be charged, because this obviously depends on individual usage from home to home.
A look at your energy bill will show you how many kWh you’ve been using.
When the price cap for January 2027 is announced next month, experts at respected energy analysts Cornwall Insight predict that bills are expected to go up again – but this time in the region of a whopping 16%.
Using the average consumption assumptions outlined above, that would take the dual fuel bill for the typical home to £1,999 a year, an increase of £276.
Dr Craig Lowrey, principal consultant at Cornwall Insight says: “These prices are going to hit households hard. January is already a difficult month for many, with cold weather and bank balances still recovering from Christmas. Now they face the biggest price cap rise in four years.
“At the moment, we can’t yet see an end to the volatility, and with gas stocks as low as they are, the effects of the Middle East conflict could be with us for many more months.”
Assuming an increase is announced, it won’t affect every household. For example, if you’re already on a fixed-rate tariff with your energy supplier, then your costs won’t go up. But if you’re a customer on a standard, variable-rate tariff, then be prepared to see your bills rise steeply.
If you’re on a fixed income, or are no longer working, the bad news is that any kind of energy price rise is going to leave you with less money to meet other expenses.
But the good news is that there are steps you can take to reduce the financial pain of bigger energy bills. Here’s what you need to consider.
If you’re on a standard, variable tariff with your energy supplier, then you will be directly exposed to any hike when price cap rises are introduced and providers put up their charges.
In contrast, fixed-rate tariffs allow customers to lock in their bills for a set period, typically a year or two. Having done this, bills are subsequently immune from any further price hikes until that period ends.
At that point, bills revert to the variable rate, or the customer can arrange another fix.
About 16 million households remain on variable rate deals, compared with approximately 11 million on fixed tariffs. This means there are plenty of energy customers who could potentially ringfence their future energy bills by moving to a fixed tariff.
Ben Gallizzi, energy expert at Uswitch.com, says: “Anyone who hasn’t fixed yet should compare deals now to protect their bills from any future rises.”
Even if you’ve not switched providers in years, the process using a resource such as a comparison site should be straightforward.
Gallizzi adds: “Switching is a lot easier than most people think, so it's well worth a look if you haven't checked your deal in a while. Have a recent bill or meter reading on hand so you can compare deals based on what you actually use and look at the total annual cost rather than just the unit rate.”
Before you commit, check how long the deal lasts and if there are any exit penalties with your existing supplier. “If you're on a standard variable tariff, you can usually leave without paying a penny. Where they exist, exit fees on fixed deals are usually waived in the final 49 days,” he adds.
As a general point on fixed deals, bear in mind that they work both ways. So, if the cost of energy ever fell during your time on a fixed tariff, then you wouldn’t receive the benefit from that reduction.
Kara Gammell, energy expert at MoneySuperMarket, says: “With uncertainty in the energy market, it’s difficult to predict exactly where bills will be over the next 12 months. That’s why it’s worth comparing deals and considering whether fixing is right for you.”
She also stresses that a fixed rate, doesn’t fix your monthly bill. “A fixed tariff gives you certainty over the unit rates you pay for the duration of the deal, but it doesn’t fix your total bill. The more energy you use, the more you will still pay.”
If you’re on a low income, you could be eligible for the Warm Home Discount Scheme. This provides a yearly discount on your electricity bill, worth £150, when you claim certain benefits including pension credit or universal credit.
So long as your provider participates in the scheme, the discount should be applied automatically. It is not a cash payment, but a credit that is applied to your bill. If you didn’t receive it last year, ask your supplier.
Around six million households who receive a qualifying benefit are set to receive the rebate this year, according to official figures. The discount is applied between October and January and recipients should receive a letter confirming their eligibility.
Despite much political to-ing and fro-ing about it in recent years, the Winter Fuel Payment is an annual tax-free payment worth up to £300 for pensioners in England, Wales and Northern Ireland.
A similar benefit applies in Scotland called the Pension Age Winter Heating Payment.
The Winter Fuel Payment is designed to cover heating bills during the colder months. If you were born before 27 June 1960, you’ll receive between £100 and £300 to go towards your bills. As this is effectively a payment, not a credit, you can spend the money on something else if you wish.
Payments are usually made in November or December and the exact amount is based on your age and financial circumstances. To qualify, you need to have reached state pension age (currently 66) and have an income below £35,000 a year.
For this winter 2026/27, eligible recipients needed to meet these criteria in ‘qualifying week’ which was 21 to 27 September.
The winter fuel payment is made to all pensioners, although you need to apply if you live abroad. If your income exceeds £35,000, then the payment must be repaid to HMRC in one of two ways – either through your tax code or via self-assessment. You can also choose not to receive the benefit by opting out of the scheme.
There’s been so much noise around heating bills over the last couple of months, that you might have forgotten about the new rules on VAT for electricity which will benefit all households, not just those on a low income.
Back in July, the then new Prime Minister, Andy Burnham announced, that from October this year, VAT would no longer be charged on electricity bills, saving the typical household £45 a year.
Even if you’re already on a fixed tariff and are making the most of any support that may be available, you could still cut your bills by making your home more energy efficient.
Solar panels, heat pumps or a more efficient boiler should trim your bills, but they’re also a significant investment, which means it’s important to factor in how long it will take to recoup your costs.
But you don’t have to spend a lot of money to make savings around the home.
Kara Gammell says: “Before spending money on new technology, start by looking at how effectively your home holds on to heat. Loft or cavity-wall insulation, where suitable, could make your home more comfortable and reduce the amount of energy required to heat it.
Heating controls are another option to consider. These can be particularly helpful when there’s only one or two of you in a family-sized home or you regularly find yourselves coming and going.
Gammell adds: “Thermostatic radiator valves can give you greater room-by-room control, while smart thermostats can make it easier to schedule your heating around your routine. The important thing is choosing controls that work for you and that you feel confident using.”
If you do decide to make a substantial investment into a new heating system – be sure to do your research. Be wary of anyone that is selling door-to-door and compare a range of options before making a final decision.
It’s also worth checking if you could be eligible for a grant to reduce the cost. The Boiler Upgrade Scheme, for example, could give you up to £7,500 to a new heating system, that doesn’t require fossil fuel, such as a heat pump.
The Energy Saving Trust has lots of practical information on its website about how to make your home more energy efficient, including guides to various heating systems and details of financial support that may be available.
Aside from making fundamental changes to your property, the benefit of little changes could all add up too.
Kara Gammell suggests: “Turn appliances off rather than leaving them on standby when they aren’t being used, consider replacing older bulbs with LED ones and tackle obvious draughts around doors and windows, taking care not to block essential ventilation.”
“Make sure radiators aren’t obstructed by furniture and bleed them if you notice cold spots at the top. Always aim for the lowest temperature that keeps you comfortably warm rather than making drastic changes that leave you cold.”
According to the Energy Saving Trust, consider these small changes that can add up to a big difference:
Criminals exploit rising energy prices with fake offers and dodgy claims. Here’s how to dodge falling prey to a scam.
Electricity bill VAT to be scrapped, updates on heating oil and how to create an unhackable password.
New research highlights long‑term financial strain among some pensioners – and why it’s worth checking what help you could be entitled to.
Keep up-to-date with the latest personal finance news with a particular focus on developments that affect the over-50s.
