Energy price cap will rise by 4% from October 2026

• Price rise is driven by conflict in the Middle East impacting international wholesale gas markets
• Government's VAT cut for electricity bills saves all customers, including those on fixed deals, around £45 a year
• 35% (around 11 million households) on a fixed tariff are unaffected by this increase
• Fixed tariff savings of more than £100 available

Energy regulator Ofgem has today [Wednesday 26 August] announced a 4% increase of the energy price cap for the period covering 1 October to 31 December 2026.

The energy price cap protects around 22 million households on default tariffs by limiting the maximum rates and standing charges that energy suppliers can charge. It is updated every three months to reflect changes in the underlying costs of supplying energy.

The current price cap for a typical household paying by direct debit for gas and electricity is £1,663. Based on the energy use of a typical domestic household, from October, the price cap will rise by £60 per year (or £5 per month) to £1,723 for the average household using both electricity and gas if this level was sustained for a year. Around 35% of households are on fixed tariffs and will not be affected by this rise- this is about 11 million households.

This increase reflects higher wholesale gas prices as a result of the ongoing conflict in the Middle East, with volatile global gas markets remaining the dominant driver of price changes.

However, prices remain 52% below the height of the energy crisis in 2022 when the government stepped in to cap bills at £2,500.

The Government's decision to remove VAT from all domestic electricity bills is reflected in this update. While higher wholesale prices are pushing up both gas and electricity costs, the VAT reduction means electricity bills will remain broadly stable. As a result, most of the increase in the price cap is driven by higher gas costs, with gas bills rising by 8%, meaning that households which do not use gas will see a much smaller increase of less than 1%.

Without the Government's intervention on VAT, this figure would have been around £45 higher. The VAT removal also benefits customers currently on fixed tariffs, with the discount automatically applied by suppliers.

Neil Kenward, Ofgem's Director General for Markets, said:

High international gas prices are continuing to drive energy costs in the UK. We welcome the Government's intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter.

Savings are available by choosing a fixed tariff, which are available at £100 or more below the October price cap, and many suppliers offer tariffs with cheaper electricity to smart meter customers for electricity consumed out of peak times. It's also worth considering different payment methods, with prepayment customers paying the lowest price cap rates, and could save consumers an average of about £45 compared to direct debit.

Ofgem urges anyone struggling with their bills to reach out to their energy supplier as soon as possible in the first instance. Suppliers should support customers to agree affordable repayment plans which can help households regain control and avoid falling further behind and offer routes to financial assistance and advice.

ENDS

Notes to editors

1. More information on the new price cap level, TDCV and comparative graphs can be found in this resource pack: https://energyaware.my.canva.site/energy-affordability-snapshot. Information on unit rates and standing charges can be found on Ofgem's Energy price cap (default tariff) levels
2. In July, Ofgem updated the metric which gauges how much energy a typical household uses, known as Typical Domestic Consumption Values (TDCV). TDCV is used to set the energy price cap and is updated every few years to ensure it still reflects how much energy people actually use. Recognising that households are using less energy than before around 7% less electricity and 17% less gas compared to the last review Ofgem reduced the TDCV in keeping with the downward trend in consumption due to improved energy efficiency, warmer weather and, more recently, higher prices. Under the updated TDCV, the typical household bill from October will rise from its current figure of £1,663 per year to £1,723. For reference, if calculated against the old TDCV rate (2023) this number would have been £1,862 rising to £1,935 from October. TDCV is a presentational tool, but updating it impacts the cap unit rate because suppliers will need to recover certain costs over fewer units of demand.

3. Wholesale prices have risen by 11% over the past three months. Building a clean energy system now means we can move away from markets beyond our control to boost energy security and stability.
4. Prices remain 52% or £1,859 lower than the height of the energy crisis in 2022 when the government stepped in to cap bills at £2,500.
5. When adjusted for inflation the new cap is 7% higher than the same period in 2025. You can read more about this, and all factors making up the new price cap level, in our summary of changes.
6. Overall number of domestic customer accounts on Standard Variable Tariffs (SVT) around 34 million' of which:

new no. of SVT Direct Debit accounts around 21 million'

new no. of SVT Standard Credit accounts around 5 million'

new no. of SVT PPM accounts around 8 million'

Total number of domestic customer accounts on fixed tariffs around 22 million'.

Overall number of domestic households* on Standard Variable Tariffs (SVT) around 20 million' of which: 

• New no. of SVT Direct Debit customers around 12 million'  
• New no. of SVT Standard Credit customers around 3 million' 
• New no. of SVT PPM customers around 5 million'  

Total number of customers on fixed tariffs around 11 million'.
*Latest Financial Responsibility RFI data is for July 2026. Tariff and customer Account RFI data is as of July 2026 (used to calculate the SVT payment splits).

7. The energy region look up tool can help find out more about which energy region you are in: Energy price cap unit rates and standing charges