26th September 2026
The warning sounds alarming. Energy bills could rise by as much as 25% in January, according to a forecast from Bloomberg Economics.
But before households start reaching for the calculator, there is an important qualification.
A 25% rise has not been announced by Ofgem. It is a forecast of where the energy price cap could go if wholesale energy prices remain at elevated levels.
The actual January to March 2027 price cap will not be announced by Ofgem until 25 November.
For households already struggling with the cost of living, however, the possibility is worth watching.
The increase already confirmed
The immediate change is rather less dramatic.
Ofgem has confirmed that the price cap will rise by 4% from 1 October, taking the typical annual bill from £1,663 to £1,723 for a household paying by direct debit and using both gas and electricity.
That is an increase of £60 a year, or about £5 a month if the October rate continued for a full year.
Ofgem says the main reason is higher wholesale gas prices, with international gas markets affected by the continuing conflict in the Middle East.
There is some protection from the increase because the Government is removing VAT from domestic electricity bills for six months from October. Ofgem says this means electricity bills will remain broadly stable, while gas costs rise more significantly. Households without gas should see a much smaller increase than households using both fuels.
So the 4% increase is real and confirmed.
The 25% figure is something different.
Where does the 25% come from?
Bloomberg Economics has estimated that the price cap could rise by about 25% in January, taking the headline annual figure to around £2,150.
That would represent an increase of roughly £427 compared with the £1,723 October figure.
Another forecast from EDF has been even higher, putting the possible January figure at around £2,165.
But not all forecasts are as severe.
Cornwall Insight's latest published forecast is £1,872 for January to March. That would be an increase of £149, or around 9%, compared with the October cap. Its forecast was calculated using wholesale market prices available on 25 August, so it does not necessarily capture subsequent movements in the energy market.
That gives us a wide range of possibilities.
It is therefore better to think of £2,150 as a warning scenario rather than a prediction that every household will receive a bill of that size in January.
The price cap is often misunderstood
There is another important point which can get lost in the headlines.
The £1,723, £1,872 or £2,150 figures are not limits on what an individual household can spend.
The price cap limits the amount suppliers can charge per unit of electricity and gas and the standing charges. The annual figure is simply what those rates would produce for a household using Ofgem's definition of "typical" consumption.
Use less energy and the bill will be lower.
Use more and it will be higher.
Ofgem changed the definition of a typical household this year because households are now using considerably less energy than previously. The new measure is 2,500 kWh of electricity and 9,500 kWh of gas a year.
That change is important when comparing today's headline figures with those from the energy crisis.
It means that some of the apparent change in the annual headline figure reflects a change in the amount of energy assumed to be used, rather than simply a change in the price of energy.
Why is gas causing so much trouble?
The underlying problem is the international energy market.
The UK remains particularly exposed to wholesale gas prices because gas is important not only for heating but also for electricity generation.
When wholesale gas prices rise, the consequences eventually feed through to household energy bills.
The current situation has been made more difficult by continuing disruption in international energy markets. Ofgem says wholesale prices have risen by 11% over the three months used in setting the October cap.
That is why events thousands of miles away can eventually affect somebody heating a house in Wick or Thurso.
The connection is not always immediate, but energy markets do not stop at national borders.
What does this mean for Caithness?
Caithness has a slightly different energy picture from many parts of Britain.
There are households using mains gas, but many rural properties depend on heating oil, electricity or other forms of heating.
The Ofgem price cap does not directly control the price of heating oil.
However, that does not mean households using oil are insulated from international energy prices. Heating oil is also linked to global oil markets, while electricity prices are affected by wholesale energy costs.
For businesses the issue can be even wider.
A haulage company does not need to be buying household gas for higher energy prices to affect it. Fuel, electricity, refrigeration, heating and transport all feed into operating costs.
Those costs eventually find their way through the economy.
That is particularly relevant in a rural area such as Caithness where many businesses and households have relatively long journeys and fewer alternatives to the car or van.
Should households panic?
Probably not.
But they should pay attention.
The 25% figure is sufficiently large that it cannot simply be dismissed, particularly if wholesale energy prices remain high through the autumn.
At the same time, the range of forecasts demonstrates why it would be unwise to treat £2,150 as a certainty.
Ofgem itself will make the decision based on the wholesale and other costs included in its price-cap methodology.
And there is still time for international energy prices to move in either direction before the January cap is calculated.
The difference between £1,872 and £2,150 is more than £275 a year on the headline typical bill. That is a substantial difference for a household budget.
It also shows why energy forecasts should be treated as something to monitor rather than something to plan around with absolute certainty.
The sensible response
For households, the sensible response is probably the same one that has become increasingly important since the energy crisis began: know how much energy you actually use.
A household using substantially less than the assumed typical consumption will not experience the same cash increase as the headline figures suggest.
Reducing wasted energy, improving insulation, checking tariffs and understanding the unit rates and standing charges can all make a difference.
Ofgem says some fixed tariffs are currently available below the October price-cap level, although whether fixing is worthwhile depends on the particular tariff and a household's circumstances.
And households struggling to pay should contact their supplier rather than allowing arrears to build up. Suppliers have obligations to work with customers on affordable repayment arrangements and may have access to additional support schemes.
The bigger question is what happens next.
The UK has already been through an extraordinary energy shock once since 2022. The Government intervened on a massive scale when wholesale prices reached levels that threatened household finances and the wider economy.
A return to anything approaching those conditions would therefore be significant.
But we are not there yet.
For the moment, the confirmed figure is a 4% increase in October.
The 25% figure is a warning from Bloomberg Economics about what January could look like if current pressures persist.
The real number will come from Ofgem in November.
For households in Caithness and elsewhere, that leaves a useful lesson from the energy crisis: international events can eventually arrive at the front door in the form of a larger electricity, heating or fuel bill.
It is worth watching the forecast.
It is not yet worth treating it as the bill.