The energy price cap rises to £1,723 a year from 1 October 2026. Ofgem confirmed the new level on 26 August 2026. It is an increase of £60 a year, or about £5 a month, for a typical household on a standard variable dual-fuel tariff paying by Direct Debit.
Almost all of the rise comes from gas. Gas costs are up around 8%, while the electricity share of a typical bill is broadly flat because VAT on domestic electricity drops to 0% on the same day. Here is what changes, what it costs, and what to do before the new rates start.
Energy price cap October 2026 at a glance
New cap level: £1,723 a year for a typical Direct Debit household, from 1 October to 31 December 2026
Previous level: £1,663 a year (1 July to 30 September 2026)
Change: up £60 a year, around £5 a month. Ofgem describes this as a 4% rise; the headline Direct Debit figures work out at 3.6%
Announced: 26 August 2026
Main driver: higher wholesale gas costs, with gas up around 8% and electricity up by less than 1%
Offsetting change: VAT on domestic electricity falls from 5% to 0% between 1 October 2026 and 31 March 2027, worth roughly £45 a year off the cap
Still well below the crisis peak: the cap is 52% lower than the £2,500 Energy Price Guarantee level of winter 2022/23
New energy price cap rates from 1 October 2026
The price cap limits the unit rate and daily standing charge your supplier can charge on a standard variable tariff. It does not cap your total bill. These are the average rates for Direct Debit customers across England, Scotland and Wales, published by Ofgem. Your exact rates vary by region and meter type.
Rate (Direct Debit average) | 1 Jul - 30 Sep 2026 | 1 Oct - 31 Dec 2026 (new) | Change |
|---|---|---|---|
Electricity unit rate | 26.11p per kWh | 26.32p per kWh | +0.21p (+0.8%) |
Electricity standing charge | 57.19p per day | 54.83p per day | -2.36p (-4.1%) |
Gas unit rate | 7.33p per kWh | 7.97p per kWh | +0.64p (+8.7%) |
Gas standing charge | 29.04p per day | 29.68p per day | +0.64p (+2.2%) |
Combined standing charges now total 84.51p a day, or about £308 a year - the amount you pay before using a single unit of energy. That is a small fall from £315 a year under the July cap, because the electricity standing charge has come down.
How the cap changed by payment method
Prepayment customers still pay the least under the cap, and standard credit customers (those who pay on receipt of a bill) pay the most.
Payment method | 1 Jul - 30 Sep 2026 | 1 Oct - 31 Dec 2026 | Change |
|---|---|---|---|
Direct Debit | £1,663 | £1,723 | +£60 |
Prepayment meter | £1,620 | £1,678 | +£58 |
Standard credit | £1,796 | £1,861 | +£65 |
Why is the energy price cap going up?
The rise is a gas story, not an electricity one. Splitting the typical dual-fuel bill by fuel makes it clear:
Fuel | 1 Jul - 30 Sep 2026 | 1 Oct - 31 Dec 2026 | Change |
|---|---|---|---|
Electricity (2,500 kWh) | £861 | £858 | -£3 (-0.4%) |
Gas (9,500 kWh) | £802 | £865 | +£63 (+7.9%) |
Total dual fuel | £1,663 | £1,723 | +£60 |
Higher international gas prices
Wholesale gas is the single largest cost in the cap and it has climbed ahead of winter, pushing the gas unit rate up 8.7%.
The VAT cut on electricity
Removing 5% VAT from domestic electricity holds the electricity side of the bill almost flat. Ofgem has said the cap would have been around £45 higher without it.
A lower electricity standing charge
The daily electricity charge falls by 2.36p, which helps low-usage homes in particular.
The practical result: homes that heat with gas feel this rise, and all-electric homes barely do. If you have a heat pump, electric heating or storage heaters, your increase should be under 1%.
What the electricity VAT cut means for you
VAT on domestic electricity is being cut from 5% to 0% for six months, from 1 October 2026 to 31 March 2027. Gas stays at 5% VAT.
It is worth roughly £45 a year to a typical household, and more if you use a lot of electricity.
It is temporary. Unless the government extends it, 5% VAT returns on 1 April 2027, which will push electricity costs back up.
Note: if you are on a fixed tariff, you will still benefit from the VAT cut - VAT is applied on top of your tariff rates, so your electricity charges should fall by about 4.8% for the six-month window even though your unit rate is fixed.
What the October 2026 price cap means for your bills
The £1,723 headline assumes a typical household using 2,500 kWh of electricity and 9,500 kWh of gas a year. Use more and you pay more. The table below applies the new October rates to three usage levels.
Usage level | Annual use (gas / electricity) | Estimated annual cost | Estimated monthly cost |
|---|---|---|---|
Low - flat or 1-bed home, 1 to 2 people | 7,500 kWh / 1,800 kWh | £1,380 | £115 |
Medium - 2-3 bed house, 2 to 3 people | 9,500 kWh / 2,500 kWh | £1,723 | £144 |
High - 4+ bed home, 4 to 5 people | 17,000 kWh / 4,100 kWh | £2,742 | £229 |
How this is calculated: We used Ofgem's average Direct Debit unit rates and standing charges for 1 October to 31 December 2026, including VAT. The medium row matches Ofgem's typical household. Your bill will differ depending on region, meter type, payment method and actual usage.
One thing worth knowing when you compare cap figures over time: from 1 July 2026 Ofgem lowered its typical consumption assumptions to 2,500 kWh of electricity and 9,500 kWh of gas, down from 2,700 kWh and 11,500 kWh. Headline cap figures published before that change were based on a higher-usage household, so they are not directly comparable with £1,723. For context on what households actually spend, see our guide to the average bills for a UK household in 2026.
When is the next energy price cap announced?
Ofgem will confirm the January to March 2027 cap by 25 November 2026.
Key changes in the coming year on bills
Date | What happens |
|---|---|
26 August 2026 | Ofgem announced the October cap of £1,723 |
1 October 2026 | New rates take effect. VAT on electricity drops to 0% |
25 November 2026 | Ofgem confirms the January to March 2027 cap |
1 January 2027 | Next cap period begins |
31 March 2027 | Electricity VAT cut is due to end |
What happens to the price cap in January 2027?
Analysts expect another rise. Cornwall Insight forecasts the cap climbing around 9% to roughly £1,872 in January 2027, and some market forecasts run as high as about £1,950. Nothing is fixed until Ofgem confirms the level by 25 November 2026, and forecasts move with wholesale prices.
If those predictions hold, a fixed deal priced below £1,723 could look better value over winter than sitting on the capped variable rate.
What to do before 1 October 2026
Take a meter reading on or just before 30 September. This makes sure your cheaper September usage is billed at September rates, not October's.
Check your Direct Debit amount. A £5 a month rise is small, but suppliers often recalculate winter payments at the same time. Make sure any increase matches your actual usage rather than a padded estimate.
Compare fixed deals against £1,723. With a further rise forecast for January, a fix below the current cap can be worth locking in. Check exit fees before you commit.
Move off standard credit if you can. Switching to Direct Debit saves around £138 a year at cap rates (£1,861 versus £1,723).
Check what support you qualify for. The Warm Home Discount, Winter Fuel Payment and supplier hardship funds are all worth looking at. Citizens Advice lists the grants and benefits available.
Cut gas use first. Because this rise is gas-led, heating changes pay back fastest. Dropping your thermostat by 1°C or lowering a combi boiler's flow temperature to 60°C both make a measurable difference.
Looking for a better energy deal?
You do not have to stay on the price cap. Standard variable tariffs are the default, not the cheapest, and there are usually fixed-rate tariffs priced below the capped rate - especially useful if January's forecast rise materialises.
Switching is quicker than most people expect: see how long it takes to switch energy suppliers in the UK. And if you want to sense-check what is really driving your bill, our round-up of energy myths clears up the most common misunderstandings.
If you are moving home or simply want someone else to do the legwork, our Connections Experts compare tariffs on your behalf and handle the switch, so you start on a good deal rather than a default one.
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