UK households have been warned that annual energy bills could rise to around £2,080 in January if current forecasts prove accurate. The warning comes after the latest Ofgem energy price cap increased on October 1, with the cap for a typical dual-fuel household rising from £1,663 to £1,723 a year.
British Gas forecast points to further rise
Energy prices could increase by a further 20 per cent when the next price-cap period begins on January 1, according to the latest forecast published by British Gas. The supplier currently puts its forecast for the first quarter of 2027 at £2,080 for a typical household. However, it stresses that the figure has a "very low" confidence level and is not guaranteed.
British Gas said wholesale energy prices can change rapidly and that global events, including developments affecting gas supplies, could influence future forecasts. The Ofgem price cap applies to households on standard variable tariffs and sets maximum unit rates and standing charges. It does not place a maximum on the total amount a household can pay, meaning those who use more energy will have higher bills. The current cap took effect on October 1 and will remain in place until the next quarterly adjustment.
Advice for households ahead of winter
British Gas has urged customers to review their tariffs ahead of the winter months, particularly as forecasts currently point towards another increase. The company also offers fixed-price deals, including a two-year "Fix & Fall" tariff, which allows customers to lock in prices while providing for prices to fall if energy costs subsequently decrease. However, consumers considering a fixed deal should compare the terms and rates with other available tariffs before switching.
The Government is also removing VAT from electricity bills for six months from October, which British Gas says will save a typical household around £45 a year. The saving is expected to be applied automatically.
January forecast details and impact
British Gas' latest forecast puts the predicted annual price-cap level at: October 2026: £1,723 — confirmed; January 2027: £2,080 — forecast, very low confidence; April 2027: £1,995 — forecast, very low confidence. The January figure would represent an increase of around £357, or roughly 21 per cent, compared with the current £1,723 cap.
However, households should not treat the £2,080 figure as a confirmed future bill. The price cap is reviewed every three months and forecasts can change significantly before a new cap takes effect. Wholesale energy costs are among the factors that influence Ofgem's calculations, meaning changes in global markets can affect the eventual level of the cap. British Gas said it updates its forecasts regularly as market conditions change.
Households on variable tariffs are also being encouraged to submit meter readings so that suppliers have accurate information about their energy use. The potential January increase comes as many households enter the colder months, when energy consumption typically rises as heating demand increases.
