Energy price cap rises 4% from 1 October: £1,723 a year for a typical home

A new Ofgem price cap runs from 1 October to 31 December 2026. For a typical household on gas and electricity paying by direct debit it is £1,723 a year, against £1,663 now: a 4% rise, or £60 over the year — roughly £5 a month.

What are the new rates?

Electricity: 26.32p per kWh and a 54.83p daily standing charge. Gas: 7.97p per kWh and 29.68p a day. These are averages across England, Wales and Scotland — your region, meter type and payment method move the numbers either way.

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The key thing about the cap: it limits the unit rate and the standing charge, not the size of your bill. £1,723 is what a notional household with average consumption pays. Use more and you pay more; there is no "£1,723 cap" sitting on your account.

Why is the cap rising?

Wholesale gas prices, driven by the conflict in the Middle East. The gas side of the bill adds about 8%, and the gas unit rate almost 9%. Electricity is nearly flat: its unit rate adds under a percent, and the daily standing charge actually falls, from 57.19p to 54.83p.

What does VAT have to do with it?

The brake is the government’s decision to cut VAT on domestic electricity to zero from 1 October 2026 until 31 March 2027, down from 5%. Ofgem estimates the cap would have been around £45 higher without it. Gas does not get the relief and stays at 5%. The VAT cut applies automatically, including to customers on fixed tariffs.

Who is unaffected?

About 35% of households — roughly 11 million — are on fixed tariffs and the October rise does not touch them until their deal ends. MoneySavingExpert calculates the cheapest fixes are around 7% below the current cap and about 10% below October prices, so a standard variable tariff almost certainly loses. If you are already on a cheap fix, though, switching early usually costs more than it saves once exit fees are counted.

Ofgem announces the next cap on 25 November, for January to March 2027.

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It already shows in the August figures: the electricity, gas and other fuels line is up 6.0% over the year, and new fixes are being written dearer than old ones.

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