Regulator Ofgem has announced a new energy price cap taking effect in October, resulting in an approximate 4% increase to typical annual bills for millions of households across England, Scotland, and Wales. The increase brings the typical dual-fuel annual bill to £1,723 for customers on standard variable tariffs paying by direct debit, representing a rise of £60 from the previous quarter. The primary driver of this increase is elevated wholesale gas prices, which are climbing 8%, while electricity costs rise less than 1% for non-gas-using households.
The energy price cap applies to more than 20 million households and is reset quarterly by Ofgem. It establishes maximum unit charges for gas and electricity on standard variable tariffs but does not affect approximately 11 million households on fixed-rate contracts. The actual bills customers pay depend on their individual energy consumption levels, payment methods, property type, location, and energy efficiency rather than the cap figure alone. Ofgem recently adjusted its estimate of typical annual household energy use downward to 9,500 kWh of gas and 2,500 kWh of electricity, reflecting improved efficiency and reduced consumption patterns in recent years.
Standing charges, the fixed daily connection fees that vary by region and payment method, will average 54.83p daily for electricity and 29.68p for gas between October and December 2026 for direct debit customers. Ofgem has proposed allowing energy suppliers to offer tariffs with lower standing charges and higher per-unit costs to provide customers with greater choice. Government measures including VAT removal from domestic electricity and elimination of Energy Company Obligation charges have provided some bill relief, though these benefits are offset by rising network infrastructure costs.
Energy consultants have warned of potential sharp price increases when the next price cap adjustment takes effect in January, with international gas prices remaining a critical factor in determining future bill levels. Ofgem’s December 2025 approval of a £28 billion investment program to upgrade electricity and gas infrastructure will result in customers paying approximately £108 in additional charges by 2031, beginning with approximately £6 monthly additions from April 2026.
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