Households are facing higher energy costs from today, 1st October 2026, as Ofgem’s energy price cap rises by 4%. The change takes the typical annual bill for a household using gas and electricity and paying by Direct Debit from £1,663 to £1,723.
That represents a £60 annualised increase, equivalent to £5 a month. The new rates apply until 31st December 2026, rather than being guaranteed for a full year.
What does the increase mean for your bills?
The price cap affects households on standard variable or default tariffs in England, Scotland and Wales, including those paying by Direct Debit, prepayment meter or when they receive a bill. The headline £1,723 figure specifically reflects typical usage* when paying by Direct Debit.
Importantly, the cap is not a limit on your total bill. It restricts the rates suppliers can charge for each unit of energy and the daily standing charge. Your actual costs depend on how much energy you use, alongside factors including your location and payment method.
Customers on fixed-rate tariffs will not see their agreed rates increase because of the price cap change. However, using more energy can still mean paying more, even while your tariff is fixed.
*Typical usage is based on Ofgem’s average figures for household energy use in England, Scotland, and Wales, which are approximately 2,700 kWh of electricity and 11,500 kWh of gas per year.
These figures are based on a typical household of 2-3 people and reflect the Typical Domestic Consumption Values (TDCV) used for the energy price cap and price comparisons.
Why are energy prices rising?
Ofgem says higher wholesale gas prices, driven by the ongoing conflict in the Middle East, are behind the increase. These are the costs suppliers face when buying the energy they sell to households.
There is some relief on electricity bills, though. The government has reduced VAT on domestic electricity from 5% to 0% between 1st October 2026 and 31st March 2027. Gas remains subject to 5% VAT.
The electricity VAT reduction is already included in the new price cap, so it should not be deducted from the £1,723 figure again. It also benefits customers on fixed tariffs, with suppliers applying the reduction automatically.
What are the new gas and electricity rates?
| Charge | July-September 2026 | October-December 2026 |
| Electricity unit rate | 26.11p per kWh | 26.32p per kWh |
| Electricity daily standing charge | 57.19p | 54.83p |
| Gas unit rate | 7.33p per kWh | 7.97p per kWh |
| Gas daily standing charge | 29.04p | 29.68p |
These are averages across England, Scotland and Wales, rather than identical rates for every household. The October figures reflect 0% VAT on electricity and 5% VAT on gas.
Could bills rise again in January?
The next price cap period begins on 1st January 2027. OVO’s forecast, updated on 1st October, puts the typical annual figure at £2,067, but the supplier rates its confidence as “very low”. This is a forecast, not a confirmed increase, and could change as market conditions develop.
