October 2026 Price Cap: New Rates and What They Mean for Your Bills

The October 2026 price cap explained

Ofgem announced on 26 August that the energy price cap will increase for the final three months of the year. From 1 October to 31 December 2026, a typical household paying by Direct Debit will see their annual dual-fuel bill rise from £1,663 to £1,723. This is an increase of £60 a year, or about £5 a month if these rates stayed the same for a full year.

The new cap replaces the current rates, which apply from 1 July to 30 September 2026. Around 22 million households in Great Britain are on standard variable tariffs and will be affected by this change. If you are one of the 11 million households on a fixed energy deal, your unit rates and standing charges will not go up, though you will still benefit from changes to electricity taxes.

It is important to understand that the price cap does not set a maximum limit on what you can be charged overall. It caps the cost of each unit of gas and electricity you use, as well as the daily standing charge. If you use more energy than the average household, your bills will be higher than the £1,723 headline figure. If you use less, your bills will be lower.^[1]

How unit rates and standing charges are changing

Your energy bill is made up of two main parts. The unit rate is the amount you pay for the actual gas and electricity you use, measured in pence per kilowatt-hour (kWh). The standing charge is a fixed daily fee that covers the cost of supplying energy to your home, maintaining the grid, and funding government schemes. You pay the standing charge no matter how much energy you use.

From 1 October 2026, the average Direct Debit unit rate for electricity will rise slightly, while the daily standing charge will actually fall. For gas, both the unit rate and the standing charge will increase. These figures are averages for Great Britain. The exact amount you pay depends on where you live and how you pay your bill. Rates can differ by payment method, so compare the tariff available for your meter and how you pay.

Because the gas unit rate is rising much more sharply than the electricity unit rate, the impact on your wallet will depend heavily on how you heat your home. We explain the reasons for this difference in the next section.^[1]

Why gas costs are driving the increase

The price cap is updated every three months to reflect the underlying costs of supplying energy. The main factor behind the 4% rise for October is the cost of buying energy on the wholesale market. Ofgem says wholesale gas prices have increased recently, driven largely by volatility linked to the ongoing conflict in the Middle East.

When global events make gas more expensive to buy, those costs eventually filter down to domestic energy bills. Because the UK still relies heavily on gas for home heating and electricity generation, a spike in wholesale gas prices has a direct impact on the price cap. However, a change in government tax policy means the October increase will affect gas and electricity bills very differently.

From 1 October 2026 to 31 March 2027, the government is cutting VAT on domestic electricity bills in Great Britain from 5% to 0%. VAT on gas will remain at its usual 5%. This temporary tax cut cancels out most of the wholesale price rise for electricity. As a result, typical electricity-only bills will rise by less than 1% under the new cap. In contrast, typical gas bills will rise by around 8%.

You do not need to apply for the electricity VAT cut. Your supplier will apply it automatically to your bill, whether you pay by Direct Debit, use a prepayment meter, or pay on receipt of your bill. This applies to all eligible households, including those on fixed tariffs.

Who will see their rates change?

The Ofgem price cap applies to standard variable tariffs, also known as default tariffs. If you have not actively switched to a new energy deal recently, or if your previous fixed deal ended and you did not choose a new one, you will be on a standard variable tariff. Around 22 million households fall into this group and will see their unit rates and standing charges change on 1 October.

If you are one of the 11 million households currently on a fixed-rate tariff, the price cap increase does not affect your agreed unit rates or standing charges. Your supplier cannot increase your core rates while you are in a fixed contract. However, because the electricity VAT cut applies to all domestic electricity bills, you will see the tax portion of your electricity bill drop to 0% from October, making your fixed deal slightly cheaper than originally quoted.

How you pay for your energy also plays a part. The £1,723 headline figure is based on a household paying by Direct Debit. If you pay by standard credit, which means paying the bill when it arrives in the post or online, your rates are usually higher. Prepayment meter rates are currently aligned closely with Direct Debit rates due to government support, but slight regional variations still exist. You can check your supplier's website or the Ofgem price cap data page to find the exact rates for your region and payment type.

Why you might have seen a £1,935 figure

You may see some reports mentioning an October price cap of £1,935, rather than £1,723. This difference is caused by the consumption benchmark used for the calculation, not by a second set of unit rates. Ofgem introduced lower Typical Domestic Consumption Values in July 2026 to reflect reduced household energy use.

To reflect this, Ofgem updated its Typical Domestic Consumption Values on 1 July 2026. The regulator lowered its estimate of typical annual electricity use from 2,700 kWh to 2,500 kWh, and typical gas use from 11,500 kWh to 9,500 kWh. The official £1,723 headline figure for October uses these new, lower consumption values.

If Ofgem still used the old, higher usage figures, the October cap would be £1,935. This is up from £1,862 under the July to September rates. While £1,935 is useful for comparing the new rates historically against caps from 2022 or 2023, it is not the official headline cap for average use today. When looking at news or supplier updates, £1,723 is the correct average figure to focus on.

How to estimate your own winter bills

Because the price cap is based on an average, it rarely matches what you will actually pay. A large, poorly insulated home with five people will pay much more than £1,723 a year, while a well-insulated flat with one person will pay less. To get a realistic idea of your costs from October, you need to look at your own usage.

You can use our energy bill calculator to get a quick estimate, or you can work it out yourself using a recent energy statement. Here is how to do it:

Remember to use the specific rates for your region and payment method if you want an exact figure, as the numbers above are national Direct Debit averages.

Should you fix your energy tariff before winter?

With prices rising in October, many households are wondering if they should lock in a fixed tariff now. A fixed tariff guarantees your unit rates and standing charges for a set period, usually 12 months. This protects you if the price cap goes up again in January 2027, giving you peace of mind over the coldest months of the year.

When comparing a fixed deal, use a personalised quote and compare its exact unit rates and standing charges with the October rates for your region and payment method. Check the contract length and exit fees too. An estimated annual cost is only comparable when both quotes use the same household consumption.

On the other hand, fixing comes with trade-offs. If wholesale gas prices drop unexpectedly early next year, a later Ofgem price cap could fall. If you are locked into a fixed deal, you will not benefit from lower rates unless you leave the contract. Any exit fee can reduce or wipe out the saving from switching.

Staying on a standard variable tariff means you accept the 4% rise in October, but you keep the flexibility to switch without penalty later if cheaper deals appear. You can check our price cap data pages to monitor market trends before making a decision.

What to do before 1 October

If you are on a standard variable tariff and do not have a smart meter, you should submit a manual meter reading to your supplier on or around 30 September. This draws a clear line under your account before the new rates begin.

If you do not provide a reading, your supplier will estimate how much energy you used in September and how much you used in October. If their estimate is wrong, you could end up being charged the new, higher October rates for energy you actually used in September when it was cheaper.

Now is also a good time to check your home for basic energy efficiency improvements. Small changes, like bleeding your radiators, checking your boiler pressure, and blocking draughts around doors and windows, can help offset the October price rise by reducing the amount of gas you need to keep your home warm.