What is the Energy Price Cap? (October 2026 update)

From 1 October 2026, the Ofgem energy price cap is £1,723 a year for a typical household paying by Direct Debit, a 4% rise on the previous quarter. Prepayment customers pay £1,678 a year and standard credit customers pay £1,861 a year.

Energy price caps were introduced by Ofgem in 2019. They limit the highest amount that an energy company is allowed to charge an average customer per unit, for the gas and electricity they use.

The aim is to make sure that the prices people pay for the energy they use are fair.

The energy price cap does not limit what you will pay in total. If you use more, you will pay more.

Understanding the Ofgem Energy Price Cap Regulations

Every three months, Ofgem reviews and updates the energy price cap regulations, in January, April, July and October.

The Ofgem energy price cap is based largely on wholesale energy prices and applies only to providers' standard and default tariffs, which the majority of households are now on.

Recent Changes in the Energy Price Cap (October 2026 Update)

The rate that people will pay based on the new cap varies by area. See the energy price cap standing charges and unit rates by region here.

However, from 1 October to 31 December 2026, the energy price cap is changing.

For a typical user paying by Direct Debit:

●     The energy price cap is set at £1,723 per year.

●     This is an increase of 4% compared to the cap in the previous period.

●     The unit rate will be 26.32 pence per kWh for electricity and 7.97 pence per kWh for gas.

●     The average daily standing charge will be 54.83 pence per day for electricity and 29.68 pence per day for gas.

For a typical user paying by cash or cheque:

●     The energy price cap is set at be £1,861 per year.

●     Customers who pay by standard credit (cash or cheque) will pay an additional £138 compared to those who pay by Direct Debit.

●     The unit rate will be 27.80 pence per kWh for electricity and 8.39 pence per kWh for gas.

●     The average daily standing charge will be 63.49 pence per day for electricity and 37.49 pence per day for gas

For a typical prepayment user:

●     The energy price cap is set at £1,678 per year. 

●     This is £45 less than customers paying by Direct Debit.

●     The unit rate will be 25.52 pence per kWh for electricity and 7.70 pence per kWh for gas.

●     The average daily standing charge will be 54.83 pence per day for electricity and 29.68 pence per day for gas.

The changes to the energy price cap are largely due to fluctuations in the wholesale energy market.

Note: from 1 Oct 2026–31 Mar 2027, VAT is removed from electricity (0% vs previous 5%); gas still carries 5% VAT

The Government’s decision to remove VAT from domestic electricity bills is reflected in the October 2026 Energy Price Cap. Although higher wholesale prices are increasing energy costs overall, the VAT reduction means electricity bills will remain broadly stable. Most of the 4% increase in the price cap is therefore being driven by higher gas costs, with gas bills rising by around 8%. Households that do not use gas are expected to see a much smaller increase of less than 1%.

Without the VAT reduction, the typical annual price cap would have been around £45 higher. The removal of VAT also applies to customers on fixed tariffs, with suppliers automatically applying the saving.

Managing High Energy Bills Under the New Price Cap

At Stay Energy Safe, we understand that it can sometimes be difficult to keep up with payments or to keep your meter topped up.

In the meantime, there are some alternatives that can help you with controlling and reducing energy bills:

●     Talk to your energy supplier about having a prepayment meter – or ‘pay-as-you-go meter’ – installed in your property. It’s an effective way to manage budgets and the amount you spend on gas and electricity. It can also be used to build up credit during the summer months, for example, and other times you are using less energy.

●     Smart meters – which can work in prepayment or credit mode – provide real-time insights into how much energy you are using. They can help you to discover habits that might be burning a hole in your wallet, so you can adjust those habits to save money.

●     To learn more about smart meters and what they can do for you click the link here.

Some people might consider tampering with their meter, stealing electricity and gas in an attempt to reduce energy bills. This is simply not an option. All it does is put you and your loved ones in serious danger. You can learn more about the dangers of energy theft here.

If you would like access to free advice on energy efficiency, reducing bills, safety tips, and services for vulnerable households, including home visits, financial guidance, and access to local resources like food banks and debt advice, you can find more information on getting help with energy bills, or visit our support page for further advice and support.

Alternatively, contact your energy provider to see what options are available for you.

Stay vigilant, to keep your household and community safe. If you suspect someone of energy theft, contact Stay Energy Safe immediately. Report it 100% anonymously on 0800 023 2777 or via our online form.