The latest forecasts suggest household energy bills could rise by more than 20% in January 2027. But what does that actually tell us about the energy market – and should you, as a business owner, be paying attention?
You may have heard Martin Lewis’s comments about the potential January 2027 increase to the domestic Energy Price Cap. Current industry forecasts from some heavy-hitting suppliers (British Gas, EDF, E.ON Next, etc) are pointing towards a typical household energy bill of around £2,117 from January 2027. An increase of approximately 23% from the October 2026 cap. This is a forecast rather than a confirmed figure, Ofgem will announce the actual January-to-March ‘27 cap in November this year.
Domestic and commercial energy have frameworks differ… so, why should you care about a domestic energy price cap?
The Energy Price Cap doesn’t apply to businesses; it applies to domestic customers on certain standard variable tariffs as a means of protection from high increases. There is no equivalent safeguard catering to businesses… when your business is coming to the end of a fixed electricity or gas contract, you have no choice but to simply consider the rates available in the commercial market. It’s best to do so during the optimal renewal window – 12 months prior to the contract expiry date, but in some cases, securing rates even further in advance may be applicable.
The domestic price cap does not have a direct influence on your options, but the forecast of it can still provide useful indicators as to what is generally happening in the energy market.
Wholesale energy costs are a major component of the prices paid by both domestic and business customers. If domestic is set to increase, there is a very strong likelihood that business will follow suit – potentially in a more impactful way.
Why are energy prices still under pressure?
The UK energy market has changed considerably since the energy crisis of 2021–23.
Wholesale prices have fallen substantially from what were some extreme levels, but they currently remain above the levels businesses were accustomed to pre-2021. There are no indicators to say we’ll return to pre-2021 levels prior to 2030 – if ever.
Throughout 2026, geopolitical events have created another layer of uncertainty.
- Global gas markets
Gas remains particularly important to the UK energy market.
Changes in global gas supply, demand and transportation can have a significant effect on wholesale prices. Energy UK reported in September 2026 that the ongoing conflict in the Middle East had created distinct volatility in wholesale cost, with gas prices remaining around 50% above pre-conflict levels.
This matters to UK electricity customers too. Electricity in the UK is directly linked to wholesale gas prices in multiple ways… if gas goes up in price, so does electricity.
- Geopolitical uncertainty
2026 has seen its fair share of global events and episodes that have directly affected major energy-producing countries, shipping routes, and LNG infrastructure.
Such volatility and uncertainty make forecasting future business energy rates particularly difficult. Suppliers will err on the side of caution as a means of self-protection, this typically means increasing rates as a means of risk mitigation.
Ofgem has specifically linked recent increases in the domestic price cap to higher wholesale gas prices resulting from the conflict in the Middle East and other ongoing factors.
- Winter demand
Colder weather and darker nights mean greater demand for energy. Currently, gas reserves across Europe are sitting around 70% capacity – which is historically low as Winter approaches. As demand increases and supply is stretched, pinch points may become apparent that will undoubtedly affect rates.
This is one reason why you should be cautious about assuming that today’s available rate will still be available (or could be bettered) as Winter takes hold. The market may not be perfect at the moment, but securing a 27p unit rate today may mean you don’t have to stomach a 30p unit rate when waiting is no longer a luxury.
- Non-commodity costs
Wholesale energy isn’t the only component of a business energy bill.
Network charges, policy costs, supplier costs and other non-commodity elements can also affect the final price.
We’ve already seen significant changes to standing and network-related charges in the past year, meaning that even when the underlying wholesale commodity price looks relatively stable, the overall cost of supplying a business can increase dramatically in other areas.
What does all of this mean for your business?
Business energy contracts are priced differently from domestic tariffs, suppliers hedge their energy purchases differently, and commercial rates depend on factors including contract length, consumption profile, meter configuration, payment terms and the supplier’s position in the market.
What the current situation does tell us is that there remains considerable uncertainty in the wholesale market. And that there are plenty of market indicators that would lean in to prospective unit rate increases.
Again, there are no guarantees – no one has access to the crystal ball that will provide certainty. What we do know from historic patterns is that rates can quickly spike in reaction to market influences – when they do, the rebound tends to be a more gradual, slower process.
If you have a renewal within the next 12 months it creates an important question:
Do you want to wait and see what the market looks like later, or understand what options are available now?
Reviewing the market today gives you a benchmark. It shows you what is on the table right now – and a lot of the time this is attractive enough to warrant a signature. Without a current pricing model, you’re flying blind – the rates available to you today may be better than what you’re currently paying; they may be about the same, or they may be slightly higher (but still comfortable enough to stomach). If you know your current options, you can make an informed decision. Some are assuming that the market is already too high to consider renewal rates… that’s a bold assumption to make given the indicators for the few months ahead of us.
Here’s why you need to see rates now:
- Compare current fixed-rate options.
- Understand how today’s prices compare with your existing contract.
- Consider whether securing a future rate, currently, makes sense for your business.
- Build greater certainty into your future energy budget.
- Reduce exposure to unexpected movements in the market.
- Give yourself more time to make a considered decision rather than making a decision under pressure close to your renewal date.
Energy is a significant proportion of operating costs for almost all businesses. Clarity on current options can seek to save you money!
The important thing is understanding your options and having the information you need to make that decision.
We work with a wide range of UK energy suppliers and can review the rates available for your business, taking into account your consumption, contract requirements and renewal date.
There is no obligation to proceed at the time of receiving a pricing model.
Start the conversation today – request a renewal pricing model, or drop us an email to explore your options.
Review the market. Understand your options. Plan with greater certainty.
