Millions of households across the United Kingdom are bracing for a modest but impactful increase in energy bills as the new Ofgem price cap takes effect on January 1, 2026. The change, while officially a mere 0.2% rise, arrives at a time when many families are already grappling with soaring costs, persistent debt, and the biting chill of winter. For many, the new year will not only bring resolutions but also renewed anxiety about keeping their homes warm and their finances afloat.
According to Money Saving Expert, the average dual-fuel household paying by monthly Direct Debit will see their annual bill increase to £1,758, up slightly from the previous cap. Prepay customers will face a similar 0.2% rise, bringing their average yearly cost to £1,711, while those who pay on receipt of a bill will see a new annual average of £1,894. These changes, though small in percentage terms, could translate to an extra £136 above the price cap for some households starting January 2, 2026.
BBC and ITV financial expert Martin Lewis emphasized that, "those on the Price Cap (all those on standard tariffs ie. if you've not fixed or got a special deal) with high electricity use and low or no gas use will see their bills rise by 3% or 4% come 1 January." He clarified that the increase is not driven by wholesale energy prices, which actually declined during the three-month assessment period. Instead, the hike is fueled by a mix of policy and network costs, including nuclear funding, network linking expenses, and the Warm Home Discount. "Electricity is seen as more universal, so when they want to add policy costs to bills, they do it there, yet that is somewhat perverse as it means we see a relative increase in electricity costs compared to gas, when the whole policy driver is to move people off gas," Lewis explained.
Scottish households, in particular, are being strongly encouraged to submit their energy meter readings before midnight on December 31, 2025. Advice Direct Scotland, which operates the national energy advice service energyadvice.scot, warned that accurate readings are vital to prevent suppliers from estimating usage and potentially charging higher rates for energy consumed at lower prices. Jillian Edmund, energy project lead at Advice Direct Scotland, noted, "The rise in the price cap on New Year’s Day might be small, but with many households stretching their budgets to the limit in the build up to Christmas, it is still unwelcome. Thousands of people across the country are still struggling with the cost of their energy bills, which remain far higher than they were when the crisis began."
Advice Direct Scotland also recommends taking a photo of the meter reading for peace of mind and ensuring smart meters are functioning properly. For those unable to submit readings before the deadline, doing so as close to the date as possible is advised. The organization provides free, impartial advice at www.energyadvice.scot or via freephone at 0808 196 8660, and is urging consumers to check if better tariffs are available, though many of the most attractive deals are reserved for customers with smart meters or higher incomes.
With the next price cap announcement scheduled for February and a slight decrease forecast for April, there is hope on the horizon. Yet, as Advice Direct Scotland points out, households will continue to pay hundreds of pounds more per year compared to pre-crisis levels in autumn 2021. The persistent high prices are pushing millions into what GB News has described as a "permanent crisis," with the average energy bill debt now standing at a staggering £1,800. This mounting debt is a stark reminder that for many families, the struggle to pay for basic utilities is far from over.
Some relief does exist for those in the direst circumstances. As freezing temperatures are set to hit the UK in early January, with lows of -4°C and amber cold-health alerts already issued, the Department for Work and Pensions (DWP) is poised to activate the Cold Weather Payment scheme. Eligible low-income households will automatically receive £25 for each seven-day period where temperatures remain at or below 0°C between November 1 and March 31. These payments are deposited directly into recipients’ bank accounts within 14 days of the cold period. Qualifying benefits include Pension Credit, Income Support, Jobseeker’s Allowance, Employment and Support Allowance, and Universal Credit, though specific eligibility criteria apply for each.
Scotland operates a separate Winter Heating Payment, ensuring that vulnerable households north of the border are not left out in the cold. Meanwhile, several major energy suppliers—including British Gas, EDF, E.ON, Octopus Energy, and Scottish Power—offer grants and support schemes for struggling customers. British Gas, for example, provides grants of up to £2,000 and runs the British Gas Energy Trust and Individuals Family Fund, the latter of which is open to non-customers as well. The Priority Services Register, a little-known but crucial resource, also offers additional support for vulnerable customers, such as advance warning of blackouts, free gas safety checks, and tailored help for those with specific needs.
For those considering switching energy suppliers, Advice Direct Scotland has outlined seven key steps to ensure a smooth and beneficial transition. These include reviewing current plans and annual consumption, researching new tariffs and suppliers using Ofgem-accredited tools, checking eligibility for government schemes like the Warm Home Discount, and understanding the switching process and potential exit fees. Customers are also cautioned to remain vigilant against scams, especially as more people seek better deals during difficult times. Using only trusted channels and being wary of offers that seem too good to be true are essential precautions.
It’s not just bill increases and cold snaps that are putting pressure on the energy system. According to recent reports, the cost of turning off wind farms due to network capacity issues has soared to £1.5 billion as of December 28, 2025. This figure underscores the financial complexities of integrating renewable energy into the national grid and highlights the ongoing challenges of balancing supply, demand, and infrastructure in a rapidly evolving energy landscape.
Homeowners looking to cut costs in the long run may qualify for free or subsidised improvements to make their homes more energy efficient. Such upgrades can help reduce future bills and ease the burden of high prices, though awareness and uptake of these programs remain limited. For those already in debt, suppliers are encouraged to offer manageable repayment plans, and customers are urged to negotiate if initial offers are unaffordable. Early communication with suppliers can prevent escalation to prepayment meters, which often come with higher costs and additional stress.
As the new year dawns, the message from consumer advocates is clear: stay informed, act early, and seek help if you’re struggling. Whether it’s submitting a timely meter reading, exploring support schemes, or switching to a better tariff, proactive steps can make a real difference. The energy crisis may not be over, but with the right advice and support, households can weather the storm a little more comfortably.
