Ofgem confirmed on 26 August 2026 that the energy price cap will rise 4% to £1,723 a year for a typical dual-fuel direct-debit household from 1 October to 31 December 2026, up £60 from the current £1,663. The increase is driven mainly by an 8% rise in gas costs; a government electricity VAT cut held it about £45 lower.
TL;DR · LAST REVIEWED Ofgem confirmed on 26 August 2026 that the energy price cap will rise 4% to £1,723 a year for a typical dual-fuel direct-debit household from 1 October to 31 December 2026, up £60 from the current £1,663. The increase is driven mainly by an 8% rise in gas costs; a government electricity VAT cut held it about £45 lower.
- The energy price cap rises 4% to £1,723 a year (up £60, or £5 a month) for a typical household from 1 October 2026.
- It replaces the current £1,663 cap and runs for 1 October to 31 December 2026.
- Most of the rise is gas: gas bills go up 8%, while households not using gas see less than 1%.
- A government cut to electricity VAT from 1 October held the increase about £45 lower than it would have been.
- The cap protects about 22 million households on default tariffs; 35% (11 million) on fixed deals are unaffected.
- October rates (direct debit, GB average): electricity 26.32p/kWh and 54.83p/day standing charge; gas 7.97p/kWh and 29.68p/day.
KEY FACTS
- Price cap from October 2026: £1,723 a year
- Increase from current cap: £60 a year
- Cap effective dates: 1 October to 31 December 2026
- Gas bill rise: 8%
- Electricity VAT cut saving: £45 a year
- Households on default tariffs: 22 million
- Households on fixed deals: 11 million (35%)
- Electricity unit rate: 26.32p per kWh
What has changed
Ofgem has confirmed that the energy price cap for 1 October to 31 December 2026 will rise by 4% to £1,723 a year for a typical household using both gas and electricity and paying by direct debit. That is an increase of about £60 a year, or £5 a month, from the current £1,663 cap that runs until 30 September. The cap sets the maximum unit rates and standing charges suppliers can charge on default tariffs, so households that use more energy will still pay more.
Why bills are rising
The increase is driven mainly by higher wholesale gas prices, with gas bills rising about 8%. Households that do not use gas will see a much smaller increase of less than 1%. A government cut to VAT on electricity, which also takes effect on 1 October, held the rise about £45 lower than it would otherwise have been, and applies automatically through suppliers including for customers on fixed tariffs.
Who is affected
The cap protects around 22 million households on default or standard variable tariffs. About 35% of households, roughly 11 million, are on fixed-rate deals and are not affected by this change. On Ofgem's older 2023 consumption basis the same cap would read £1,862 rising to £1,935; the lower headline figures reflect the updated assumption that households now use less energy.
What to do before 1 October
Submit a meter reading on or close to 30 September so your supplier bills usage before the new rates at the old price. Compare fixed tariffs, some of which sit below the cap, and check eligibility for support such as the Warm Home Discount or supplier hardship funds. There is no need to switch in a panic: the cap changes every three months, and fixing only makes sense if the deal beats the cap over its term.
October 2026 unit rates and standing charges
For a household on a default tariff paying by direct debit, the average rates across England, Scotland and Wales from 1 October are set out below. Electricity carries no VAT between October 2026 and March 2027; gas still includes VAT at 5%. Because of the electricity VAT removal, these figures cannot be compared directly with earlier periods. The cap also covers standard credit, prepayment and Economy 7 customers.
| Fuel | Unit rate | Standing charge |
|---|---|---|
| Electricity | 26.32p per kWh | 54.83p per day |
| Gas | 7.97p per kWh | 29.68p per day |
Ofgem will announce the next cap, for 1 January to 31 March 2027, on 25 November 2026.
DISCLAIMER
This article is editorial information, not financial advice. Kael Tripton Ltd is not authorised or regulated by the Financial Conduct Authority. Figures were correct at the last review date shown above; verify current rates and rules with the primary sources listed below before acting.
Frequently asked questions
How much is the energy price cap from October 2026?
£1,723 a year for a typical dual-fuel household paying by direct debit, from 1 October to 31 December 2026, up £60 from £1,663.
Why is the price cap going up?
Mainly higher wholesale gas costs, which push gas bills up 8%. A government electricity VAT cut from October held the rise about £45 lower.
Does the cap limit my total bill?
No. Ofgem caps unit rates and standing charges, not the total. If you use more energy, you pay more.
Am I affected if I am on a fixed tariff?
No. Around 35% of households (11 million) are on fixed tariffs and are not affected by this change.
What should I do before 1 October?
Submit a meter reading on or near 30 September, compare any fixed deals below the cap, and check whether you qualify for energy bill support.
Sources
How the electricity VAT cut works
From 1 October 2026, VAT is removed from household electricity bills, saving a typical household about £45 a year, according to the Department for Energy Security and Net Zero. It follows £150 of costs removed from bills earlier in the year and has limited the size of the October price cap rise. You do not need to do anything to claim the saving.
Suppliers currently apply 5% VAT to the electricity you use plus the daily standing charge. From 1 October that requirement is removed, so no VAT is charged on electricity - including on fixed tariffs where your rate is already locked. Gas still carries VAT at 5%. On a prepayment meter, VAT is normally added to your top-ups but will no longer be applied. Small businesses, charities and residential care homes on the reduced 5% rate also move to 0%.
The cut is funded for the 2026 to 2027 financial year. Around 6 million households are also eligible for the Warm Home Discount this winter, worth a further £150 off electricity bills. (Source: GOV.UK, Department for Energy Security and Net Zero.)
Update: 11 September 2026, the 1 October cap is £1,723 and electricity VAT is suspended Ofgem confirmed on 26 August 2026 that the energy price cap for 1 October to 31 December 2026 is £1,723 a year for a typical dual-fuel household paying by Direct Debit, up 4% (£60) from £1,663 in July to September. Typical use is now defined as 2,500 kWh of electricity and 9,500 kWh of gas a year. Average GB Direct Debit rates from 1 October are 26.32p per kWh for electricity with a 54.83p daily standing charge, and 7.97p per kWh for gas with a 29.68p daily standing charge. Gas drives the rise: the gas unit rate is up about 9% while electricity is up about 1%. VAT on electricity is suspended from 1 October 2026 to 31 March 2027, so electricity figures exclude VAT while gas still carries 5% VAT. Ofgem says every default-tariff household pays less for electricity as a result and that comparisons with earlier periods are not like for like. The prepayment cap rises from £1,620 to £1,678. Fixed-tariff customers are unaffected until their deal ends. Ofgem announces the January to March 2027 level by 25 November 2026; the House of Commons Library notes forecasts of a further rise of around 9% for that quarter. Before 30 September, submit a meter reading so usage before the change is billed at the old rates (smart meters do this automatically), check whether a fixed deal ends this autumn and its exit fees, and compare any fix against the October cap on unit rates and standing charges, not the headline figure. Winter Fuel Payment qualifying week is 21 to 27 September 2026. |
October 2026 cap confirmed: what changes on 1 October Ofgem announced on 26 August 2026 that the energy price cap rises 4% for 1 October to 31 December 2026. The cap level for a typical dual-fuel household paying by direct debit goes from £1,663 to £1,723 a year, a rise of £60 a year or about £5 a month. The cap limits unit rates and standing charges, not the total bill, so households using more energy pay more than the headline figure. Around 22 million households on default tariffs are covered by the cap; about 11 million households on fixed tariffs are not affected by the rise. Electricity on a default tariff paid by direct debit averages 26.32p per kWh with a standing charge of 54.83p a day, across England, Scotland and Wales. Gas averages 7.97p per kWh with a standing charge of 29.68p a day, including VAT at 5%. Most of the increase is driven by gas costs, with gas bills rising 8%, so households that do not use gas see an increase of less than 1%. VAT on domestic electricity is zero rated from 1 October 2026 to 31 March 2027, announced by the Prime Minister's Office, HM Treasury and DESNZ on 21 July 2026, and funded this financial year from the cancelled Digital ID programme. Ofgem states that without the VAT removal the October cap figure would have been around £45 higher. The VAT cut applies to electricity only and covers Great Britain; gas stays at 5% VAT and the Northern Ireland Executive receives equivalent funding. Because the cap rise of £60 a year is larger than the VAT saving of about £45 a year, a typical dual-fuel household on the cap pays more from 1 October despite the tax cut. The next cap period runs from 1 January 2027 and Ofgem normally confirms rates about five weeks beforehand. |
Update: 16 September 2026 UK consumer price inflation rose to 3.1 percent in the 12 months to August 2026, up from 2.9 percent in July and the highest rate since March 2026, according to the Office for National Statistics on 16 September 2026. The CPIH measure stood at 3.3 percent and the RPI at 3.4 percent, while core CPI was unchanged at 2.6 percent. Transport prices rose 4.6 percent, driven by petrol, diesel and airfares. Electricity, gas and other fuels increased 6.0 percent, with gas up 8.6 percent and liquid fuels up 64.6 percent. Food and non-alcoholic drinks were unchanged at 1.3 percent. Bank Rate is 3.75 percent, with the Monetary Policy Committee decision due on 17 September 2026. The next CPI release, covering September, is scheduled for 21 October 2026 and is used for the state pension triple lock and benefit uprating. |
Update: Bank of England expects the cap to rise 24% in early 2027 CPI inflation was 3.1% in the 12 months to August 2026, according to ONS data published on 16 September 2026. This is more than one percentage point above the 2% target, so the Governor of the Bank of England wrote an open letter to the Chancellor, published on 17 September 2026. In that letter, the Bank says it expects the Ofgem price cap to rise by about 4% in the fourth quarter of 2026 and by a further 24% in the first quarter of 2027. The 1 October 2026 cap figure on this page is unchanged. The January 2027 cap will be set by Ofgem and announced in late November. Households on fixed deals are not affected by cap changes until the fix ends. |
Update: 21 September 2026 From 1 October 2026 the Ofgem price cap for a typical dual fuel household paying by Direct Debit is £1,723 a year, up 60 pounds or 4 per cent from 1,663 pounds, and runs until 31 December 2026. Gas drives the rise, with gas bills up about 8 per cent, while households that do not use gas see an increase of less than 1 per cent. From the same date VAT on domestic electricity in Great Britain falls from 5 per cent to 0 per cent, which the government expects to save around 45 pounds a year. Ofgem says the cap would have been about 45 pounds higher without the cut, and it also reaches households on fixed tariffs automatically. The cap covers around 22 million households on default tariffs. About 11 million on fixed deals are not affected by the rise, and Ofgem says fixed tariffs are available at 100 pounds or more below the cap. The cap limits unit rates and daily standing charges, not the total bill. Ofgem changed its typical use figures on 1 July 2026, so 1,723 pounds is not directly comparable with caps before July; on the old basis the same rates equal 1,935 pounds. Northern Ireland is not covered by the Ofgem cap, as its energy market is regulated separately by the Utility Regulator. The next price cap announcement is on 25 November 2026, for 1 January to 31 March 2027. |
Update: 25 September 2026 The Ofgem price cap rises on 1 October to £1,723 a year for a typical dual-fuel household paying by direct debit, up from £1,663, an increase of about 4%. The cap limits unit rates and standing charges rather than the total bill, so a household using more energy pays more. Submitting a meter reading on or close to 30 September means usage up to that date is billed at the lower rate instead of being estimated across the increase. The Warm Home Discount gives £150 off an electricity bill between October and March. Most eligible households are identified automatically from benefit records and receive a letter, and the rebate is applied to the bill rather than paid as cash. A fixed tariff agreed before the change is not affected by the cap rise for its term, and exit fees apply on most fixes if a household leaves early. Suppliers must offer an affordable payment plan under their licence conditions, and hardship funds exist at several suppliers. |
Update: 30 September 2026 A much larger rise is now forecast for January. Cornwall Insight expects the price cap to reach £1,999 a year for a typical dual-fuel household paying by direct debit in January to March 2027, a rise of 16 percent, or £276, from the October level of £1,723. That would be the largest quarterly increase since January 2023. The forecast has been revised sharply upwards. Cornwall Insight's previous estimate for the January quarter was a rise of around 9 percent, and it attributes the revision to higher wholesale gas prices and to European gas storage levels ahead of winter. Ofgem sets the January cap from wholesale prices between 19 August and 17 November and will publish the final figure on 25 November 2026, so the number can still move, though Cornwall Insight says a rise is all but certain given the increases already recorded. Other forecasters are higher still: Bloomberg Economics analysis cited in press coverage puts the possible January increase at around 25 percent, which would take a typical annual bill to about £2,150, so the range of published forecasts is wide. |
