This article covers the Q1 2026 price cap period (January to March 2026). For the latest figures, see Ofgem price cap Q4 2026 confirmed at £1,723 →
The Short Version
The government has set the maximum energy bill for January to March 2026 at £1,758 per year for a typical household. That's only £3 more than last quarter.
Sounds like good news, right? Here's the catch: the actual cost of energy went DOWN by £29.
So where did that £29 saving go? It got swallowed up by taxes, green levies, and other charges the government adds to your bill.
Why Didn't Bills Fall?
- Energy got cheaper: The actual gas and electricity cost dropped by £29.
- But government charges went up: Things like funding for new nuclear plants and help for low-income households added £21.
- Running costs rose too: Because people are using less energy overall, the cost per unit goes up — adding another £9.
The Hidden Charges on Your Bill
That £236 in "policy costs" includes:
- Help for struggling households: £46 per year goes to fund support schemes like the Warm Home Discount.
- New nuclear plant funding: About £14 per year to build Sizewell C.
- Green levies: Subsidies for renewable energy and energy efficiency programmes.
The actual energy you use? Only costs about £690 per year. The rest is taxes, network fees, and charges.
What's Coming Next?
- Network upgrade costs could add £20–£50 from April 2026.
- Bills could hit around £1,800 by summer.
- Fixed deals might look even better by then.
Good news: Fixed deals are currently beating the price cap. Locking in now could save you money before April increases hit - check how much you could save on the SwitchPilot Tariff Tracker.
Frequently asked questions
What is the energy price cap for January to March 2026?
The Q1 2026 energy price cap is set at £1,758 per year for a typical dual-fuel household. That is just £3 more than the previous quarter, even though the underlying cost of wholesale energy actually fell.
Why didn't energy bills fall even though gas got cheaper?
The wholesale energy cost dropped by £29, but government policy charges and green levies went up by £21, and fixed running costs added another £9. The net result was that the price cap barely moved despite cheaper energy.
What is the energy price cap and how does it work?
The energy price cap sets the maximum unit rate and standing charge that suppliers can charge customers on default variable tariffs. It is reviewed every quarter by Ofgem based on wholesale energy costs, network charges, and other costs. It is a ceiling, not a fixed price.
What percentage of my energy bill is actual energy cost?
In Q1 2026, only around 39% of a typical £1,758 annual bill (about £690) is the actual wholesale energy cost. The rest covers network costs (27%), policy and green levies (13%), and operating and other charges.
Can I pay less than the January 2026 price cap?
Yes. Fixed-rate tariffs were available that priced below the price cap. The price cap protects you from the worst, but switching to a competitive fixed deal can save you money - check how much you could save on the SwitchPilot Tariff Tracker.
When is the Q2 2026 energy price cap announced?
Ofgem announces each quarter's price cap roughly six weeks before it takes effect. The April to June 2026 (Q2) price cap was announced in late February 2026 and took effect on 1 April 2026.
For more context on the price cap and energy costs, read April 2026 Price Cap, Why UK Electricity Bills Follow Gas Prices, and The Ban on Acquisition Tariffs.