Table of contents

Ofgem has announced that the energy price cap will rise by 4% from 1 October 2026. On a like-for-like basis, typical household energy costs will reach their highest level in three years[1].

For a typical household paying by Direct Debit and using both gas and electricity, the yearly figure will rise from £1,663 to £1,723. That’s an increase of £60 a year, or around £5 a month, if these rates stayed in place for a full year and energy use remained the same.

This guide explains what the energy price cap is, whether it affects you and what you can do if higher energy bills are becoming difficult to manage.

What does the new energy price cap mean for you?

The new cap applies from 1 October to 31 December 2026[2].

Your actual bill will depend on:

  • How much gas and electricity you use
  • Where you live
  • How you pay for your energy
  • Whether you are on a standard variable tariff or a fixed tariff

The cap is based on typical household energy use. If you use more energy, you could pay more. If you use less, you could pay less.

What is the energy price cap?

The energy price cap limits the amount energy suppliers can charge for each unit of gas and electricity, as well as daily standing charges.

It applies to most people on a standard variable tariff, sometimes called a default tariff.

 This includes customers who pay by:

  • Direct Debit
  • Standard credit, where you pay after receiving your bill
  • Prepayment meter
  • Economy 7 or other multi-rate meters

Ofgem reviews the cap every three months. It can go up or down depending on the cost of supplying energy.

The cap applies in England, Scotland and Wales. It doesn’t apply in Northern Ireland.

What are the new energy rates from October 2026?

Energy

Unit rate

Daily standing charge

Electricity

26.32p per kWh

54.83p

Gas

7.97p per kWh

29.68p

Source: Ofgem[3]

These figures can vary by region and payment method. Your supplier can confirm the rates that apply to your account.

The figures include VAT on gas. Domestic electricity won’t have VAT between 1 October 2026 and 31 March 2027, following a government scheme[4]. This means the electricity rates aren’t directly comparable with previous periods because the VAT treatment has changed.

Without the Government’s decision to remove VAT from domestic electricity bills, the new price cap would have been around £45 higher per year.

The VAT removal also applies if you are on a fixed tariff. Your supplier should apply the discount automatically.

Why is the energy price cap going up?

Ofgem says the increase is mainly due to higher wholesale gas prices. Global gas markets have remained volatile because of the ongoing conflict in the Middle East.

Ofgem says energy prices remain 52% below the height of the 2022 energy crisis. At the time, the Government introduced the Energy Price Guarantee, which limited unit rates so a typical household would pay around £2,500 a year.

The change is likely to be felt most by households that use gas for heating and hot water. Ofgem says gas bills are expected to rise by around 8%, while households that don’t use gas may see a much smaller increase[5].

What’s the current energy price cap?

From 1 July to 30 September 2026, the energy price cap is £1,663 a year for a typical dual-fuel household paying by Direct Debit.

Average rates for this period are:

Energy

Unit rate

Daily standing charge

Electricity

26.11p per kWh

57.19p

Gas

7.33p per kWh

29.04p

Source: Ofgem[6]

Will the price cap rise affect a fixed tariff?

If you’re on a fixed tariff, the price cap rise won’t affect the underlying rates in your agreement. However, the separate VAT cut on electricity also applies to fixed tariffs, so your supplier should apply this reduction automatically.

Before changing tariffs, check:

  • How long the fixed deal lasts
  • If there’s any exit fees
  • What happens when the deal ends
  • Whether the monthly cost is affordable for you

Some fixed deals may cost less than the October price cap. But a fixed tariff may not suit everyone, especially if prices fall later or you need to leave the contract early.

What should you do if you’re worried about your energy bills?

If you’re struggling to afford your energy bills, speak to your supplier as soon as you can. They may be able to discuss an affordable repayment plan or tell you about support that may be available.

It can also help to look at your household budget and check whether you’re receiving all the income and support you may be entitled to.

BudgetSmart can help you explore ways to reduce costs and make the most of your money.

If energy bills are part of wider money worries, PayPlan can offer free debt advice. You can get debt help online or call us on 0800 316 1833.

*PayPlan’s advice is free, but some solutions may involve fees.

 

 

Sources:

[1] Household energy bills to hit three-year high as Ofgem announces 4% rise from October

[2] Energy price cap will rise by 4% from October 2026 | Ofgem

[3] Energy price cap unit rates and standing charges | Ofgem

[4] New PM cuts tax on household electricity bills to give breathing space on cost of living – GOV.UK

[5] Energy price cap will rise by 4% from October 2026 | Ofgem

[6] Energy price cap unit rates and standing charges | Ofgem