UK energy prices in 2027: what is decided and what to do now

Every British energy bill is assembled from parts that different people set at different times of year. Some of 2027 is already written down; the biggest part is not. Knowing which is which is what turns “should I fix?” from a guess into a decision.

Who sets what, and when

Wholesale energy is the gas and electricity your supplier buys on the market. Ofgem says it is over 40% of the cap. Nobody sets it; it is traded daily, and this autumn the NBP gas price has been around 200p a therm. For the cap, Ofgem looks at wholesale prices over an observation window in the months before each quarter, so the January cap reflects roughly August to November trading.

Network charges pay for the wires and pipes. Ofgem sets them through multi-year price controls; the current one for transmission and gas distribution (RIIO-3) runs from April 2026 to 2031. These costs added £66 to the April 2026 cap and the regulator has said investment continues to rise, although it deliberately softened the first two years. Charges change every 1 April.

Policy costs fund government schemes. Two of them, the Renewables Obligation (75% of it) and ECO, came off bills from April 2026, worth about £134 to a typical home according to Energy UK. The Warm Home Discount stays on bills and now sits in the unit rate rather than the standing charge.

Supplier costs and profit are allowances Ofgem sets inside the cap, including an allowance for bad debt. Ofgem put the cost of debt recovery at around £52 per household in late 2025 and launched a debt relief scheme in 2026 to reduce it.

VAT is set by the Treasury: 5% on gas, and 0% on electricity in Great Britain from 1 October 2026 to 31 March 2027 under HMRC’s temporary zero rate.

The cap itself is set by Ofgem four times a year, announced about five weeks ahead: late November for January, late February for April, late May for July, late August for October. It caps unit rates and standing charges for standard variable tariffs. It does not cap fixed deals, and it does not cap your total bill.

What is already announced for 2027

• The April 2027 network charges will follow the RIIO-3 settlement: higher than 2026, with the exact figures published by the network companies and NESO over the winter.
• The 0% VAT on electricity ends on 31 March 2027 unless extended.
• The 0% VAT on solar panels and batteries also ends on 31 March 2027, returning to 5%.
• The Boiler Upgrade Scheme’s extra £1,500 for oil and LPG homes ends in March 2027; the base £7,500 continues.
• ECO4 closes on 31 December 2026 with no successor; Warm Homes Plan grants run through councils to 2028 and beyond.
• Ofgem’s lower standing charge tariff pilot, which began in 2026, continues; the regulator has said these tariffs move costs rather than remove them.
• Typical consumption values stay at 2,500 kWh electricity and 9,500 kWh gas, so headline cap figures through 2027 are comparable with October 2026’s £1,723.

What is uncertain

The January cap. Forecasts range widely. Cornwall Insight’s figure, published on 23 September but calculated from wholesale prices at the close of 25 August, is £1,872 for a typical dual-fuel Direct Debit home, about 9% above October, with the VAT cut included. Under the old consumption values the same forecast would read £2,107. Wholesale gas has risen since late August, and the supplier forecasts that MoneySavingExpert reported for the week of 21 September (from EDF, British Gas and E.ON Next) average about £2,117, a rise of around 23% on the current consumption values. Cornwall’s August press release had already warned of “substantial volatility” and said that even a settlement in the Middle East would leave Europe with low storage and strong Asian demand for LNG through winter. Ofgem announces the actual figure in late November.

April 2027 and beyond. Cornwall Insight has not published figures past March in the page we checked; anyone quoting an April 2027 cap is quoting a model, not a decision. The forward market in September priced Winter 2027 gas far below Winter 2026, which if it holds means the second half of 2027 could be cheaper than the first. That is a market view, not a promise.

The Budget. The government has said longer-term measures on bills will come at the Budget with an OBR forecast. The VAT extension, any change to the Warm Home Discount, and whether more policy costs move to general taxation are all open.

Standing charges. Ofgem’s wider review of how fixed costs are shared has no decision date; expect consultation, not a cut, in 2027.

Fix or variable: how to decide this autumn

The variable tariff is the cap: £1,723 on typical use from October, and somewhere between about £1,872 and £2,117 from January on the forecasts published so far. A fix is a bet that the average cap over the fix term will be higher than the fixed price. What the sources we checked show:

Ofgem said on 26 August that fixes were available £100 or more below the October cap. A month later the gap had narrowed: on 28 September the cheapest fixes in MoneySavingExpert’s table were 1.6% to 3.2% above the July cap, which leaves them only a little below the October cap of £1,723. MSE’s view is that grabbing a cheap fix now is “the sensible risk averse option” for most people on the cap. Uswitch, looking at the cheapest fix available on each day of a 12-month period, found it priced below the cap on 341 of 365 days.

So the decision comes down to four checks:

1. Get the annual figure for a fix on your real usage in kWh and compare it with the October cap for the same usage, standing charges included. Our bill guide shows where the kWh figures are.
2. Look at the exit fee. A fix with a small exit fee is a one-way bet: you keep it if prices rise and leave cheaply if they fall. A large exit fee turns it into a real commitment.
3. Decide the term. A 12-month fix covers the winter that forecasters worry about and ends before the second half of 2027 that the forward market thinks is cheaper. Longer fixes need lower exit fees to justify.
4. If your fix ends between now and January, use the 49-day window: no exit fees, and you can book the new deal to start on the day the old one ends.

If you are on the capped variable rate and do nothing, you pay the January cap in January, whatever it is. That is a legitimate choice if you expect the Middle East to settle. If the supplier forecasts are closer to the mark, the January to March cap would run at an annual rate roughly £400 above the cheapest fixes on offer in late September for a typical home.

When to compare

The announcement dates are the moments. Fixed prices move in the weeks before each cap announcement as suppliers reprice against the forecast; the best window is usually a few weeks before the announcement rather than after. For January that means October and early November. Compare now with your real usage, and if you decide to wait, set our contract alert so the 49-day window on your current deal does not pass unnoticed. Then compare again in late February, when Ofgem publishes April’s cap and the new network charges land.

What a household should do now, in order

Read the last bill and write down annual kWh for gas and electricity. Check the payment method (Direct Debit is cheaper than paying on receipt of a bill). Run a comparison on those numbers. Fix if the total is at or below the October cap and the exit fee is modest; otherwise stay variable and re-check in early November before Ofgem’s announcement. Claim the Warm Home Discount if eligible. And if a heat pump, solar or an EV is in the plan, remember that the 0% VAT on the first two ends on 31 March 2027, which is a firmer date than anything on this page about the price cap.