Energy price cap rises 4% to £1,723 from 1 October

Ofgem has confirmed that the energy price cap will rise by 4% from 1 October to 31 December 2026. A typical household that uses both gas and electricity and pays by Direct Debit will pay £1,723 a year, up from £1,663 between July and September. That is an extra £60 a year, or roughly £5 a month.

The regulator says the rise is down to continued pressure on oil and gas supplies linked to the conflict in the Middle East. Gas bills are going up by around 8%, while electricity bills stay broadly stable.

Why electricity isn't rising

From 1 October the government has removed VAT from household electricity bills, covering both unit rates and standing charges. The Department for Energy Security and Net Zero says this saves an average of £45 a year, and Ofgem says that without it bills would have risen by a further £45. Suppliers apply the cut automatically, so you don't need to do anything. VAT is still charged on gas.

What this means for you

The cap limits the unit rates and standing charges on default (standard variable) tariffs. It is not a cap on your total bill, so the more energy you use, the more you pay. If you're on a fixed deal, your rates won't change until it ends. Ofgem says about 11 million households (35%) are on fixed tariffs.

Ways to save

• Look at fixed deals. Ofgem says some fixed tariffs are available at more than £100 below the October cap. Check exit fees and compare the deal with the forecast for January before you sign.
• Pay by Direct Debit or check your payment method. Prepayment customers get the lowest cap rates, around £45 cheaper than Direct Debit, while paying on receipt of a bill usually costs more.
• Use a smart meter to shift your usage. Ofgem suggests time-of-use electricity tariffs, which charge less at off-peak times, could suit some households.

Sources: Ofgem, GOV.UK (DESNZ)