UK energy bills to rise 4% from October under new price cap

Household energy costs in Great Britain are set to rise from October 1 after regulator Ofgem confirmed a 4% increase in the price cap for the three months ending December 31, 2026.

For a typical household using gas and electricity and paying by direct debit, Ofgem’s annualized comparison rises from £1,663 to £1,723. The £60 difference is not a guaranteed increase for every household or a fixed monthly charge: it assumes typical energy use and shows what the October-to-December rates would cost over a full year.

The decision, announced August 26, applies to default tariffs in England, Scotland and Wales. Ofgem says the cap protects about 22 million households by limiting the maximum unit rates and standing charges suppliers may charge on those tariffs.

What changes on October 1

For direct-debit customers, Ofgem’s average October-to-December rates are 26.32 pence per kilowatt-hour for electricity and 7.97 pence per kilowatt-hour for gas. The average daily standing charges are 54.83 pence for electricity and 29.68 pence for gas.

These are England, Scotland and Wales averages. Actual bills vary with energy use, region, meter type and payment method. The price cap limits unit rates and standing charges; it does not limit the total amount a household can pay.

Electricity figures also cannot be compared directly with the previous quarter without accounting for a tax change. Ofgem’s figures include 5% VAT on gas, while domestic electricity will have 0% VAT from October 1, 2026, through March 31, 2027.

Why the cap is rising

Ofgem says higher wholesale gas prices are the main driver of the increase. Under the new cap, gas costs rise by 8%, while electricity costs remain broadly stable because the VAT change offsets pressure elsewhere in the electricity bill.

The government says removing VAT from household electricity prevents the typical cap increase from being about £45 higher. The measure is temporary: the government says it is funded for the 2026-27 financial year.

Who is affected

Customers on standard variable and other default tariffs will generally see their capped rates change on October 1. The cap also has different rates for standard-credit and prepayment customers, so the direct-debit figure of £1,723 should not be treated as a universal bill amount.

Customers on fixed tariffs are generally outside the October cap increase because their agreed rates are fixed for the contract period. They should check their terms rather than assume the new cap applies. The electricity VAT removal is separate: the government says suppliers will apply the 0% rate automatically to household electricity, including fixed tariffs.

Prepayment customers should also receive the electricity VAT change automatically when they add credit from October 1. The precise saving will depend on the electricity price and how much electricity a household uses.

What households should check before October 1

Customers should confirm whether they are on a default or fixed tariff, review the rates that apply in their region and submit a meter reading around October 1 if their supplier requests one. Prepayment customers should check how the VAT change appears when adding credit.

Anyone worried about arrears should contact their supplier before missing a payment. Ofgem says suppliers should help customers agree affordable repayment plans and identify routes to financial assistance and advice.

The immediate change is a higher gas-led cost for many households, partly offset by the electricity VAT measure. Ofgem’s announcement sets rates only for October 1 through December 31, 2026; it does not establish the next price-cap period.

Sources

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