Terra Firma Energy – 14 January 2026

Ahead of the January 2026 increase to the energy price cap, Energy UK has warned that household energy bills remain unaffordable for millions, despite the relatively modest rise.

Speaking on the change, Ned Hammond, Deputy Director of Policy (Customers), said that while the upcoming adjustment represents only a small increase, overall energy costs are still placing significant pressure on households across the UK.

Although wholesale gas prices have fallen compared with recent peaks, they remain well above historic levels. At the same time, rising policy-related costs continue to feed through into consumer bills, limiting the impact of recent market improvements.

Energy UK welcomed the Chancellor’s decision at the Budget to shift a substantial portion of policy costs from energy bills into general taxation. Once implemented in April, this change is expected to provide meaningful relief for households nationwide.

However, the organisation cautioned that this intervention alone will not be enough. Even with these measures in place, energy bills are forecast to stay considerably higher than they were before the energy crisis.

With more than six million households currently experiencing fuel poverty and domestic energy debt reaching record levels of approximately £5.5 billion, Energy UK stressed the need for a broader, long-term strategy to reduce costs and support vulnerable customers.

The group highlighted the importance of continuing efforts to narrow the price gap between electricity and gas, while calling on the Government’s forthcoming Warm Homes Plan to clearly outline how it will help millions more households heat their homes affordably. It also urged the development of a better targeted support scheme to ensure help reaches those most in need.

Editor’s note:
Energy UK has published a detailed briefing outlining the factors contributing to the latest price cap increase.