Ofgem confirmed the new energy price cap on 26 August: it's going up 4%, to £1,723 a year for a typical dual-fuel household, even though VAT is coming off your electricity from 1 October.
Here's what actually changed, what the new rates are, and what's worth doing before they land.
The confirmed numbers
From 1 October to 31 December, the cap for a typical household paying by direct debit for both gas and electricity rises from £1,663 to £1,723 — up £60 a year, or £5 a month, if usage stayed at that level all year. That's a 4% increase.
On the older, higher consumption benchmark some coverage still quotes, the same rates come out at £1,935, up from £1,862. It's not a different cap — just the same prices measured against an assumption of a bigger household. What lands on your bill depends on the unit rates below, not either headline figure.
Ofgem reviews the cap every three months. The next update, covering January to March 2027, is announced on 25 November 2026. We've rounded up what the January 2027 forecasts say, and whether to fix now.
The new unit rates
Here's what the cap actually sets, and how it compares with the rates that have applied since July:
Electricity (direct debit): 26.32p per kWh, standing charge 54.83p a day. From 1 October this carries no VAT — down from 26.11p per kWh and a 57.19p standing charge in July, both of which included 5% VAT. Once you strip the VAT out of the comparison, the underlying electricity rate has actually gone up — the VAT cut is doing the work of keeping the number you see roughly flat.
Gas (direct debit): 7.97p per kWh, standing charge 29.68p a day, still with 5% VAT included. That's up from 7.33p per kWh and a 29.04p standing charge in July — a rise of about 8%, and the real driver of October's increase.
Gas is doing almost all the work here. Ofgem's own figures put the electricity-only rise at under 1% once the VAT cut is accounted for, against an 8% jump in gas. If your home runs on gas central heating, October is going to feel like a gas-price rise more than an electricity one.
Why bills are rising when a tax cut just landed
Two things hit your bill in the same quarter, pulling in opposite directions. Wholesale gas has climbed since the summer, driven by the continuing conflict in the Middle East — gas still sets electricity prices for much of the time in the UK, which is why both fuels tend to move together even when the underlying cost pressure is really about gas.
Against that, the government has taken VAT off domestic electricity from 1 October. Ofgem says that without the VAT cut, October's cap would have been roughly £45 higher. So the cut isn't reversing the rise — it's absorbing most of it on the electricity side, which is why the headline number looks like a moderate 4% rather than something sharper.
Worth keeping in perspective: even at £1,723, the cap sits 52% below the £2,500 level the government capped bills at during the 2022 crisis.
What the VAT cut actually covers
Four things worth knowing before you assume your whole bill is about to drop:
- Electricity only. Gas VAT stays at 5%. If you heat with gas, you won't see this saving on the part of your bill that's rising the most.
- Temporary — for now. The zero rate runs from 1 October 2026 to 31 March 2027. Unless extended, VAT on electricity reverts to 5% next April.
- Great Britain, not Northern Ireland. The change applies in England, Scotland and Wales. Northern Ireland's energy VAT sits under separate arrangements.
- It reaches fixed tariffs too. Ofgem's announcement confirms the discount is automatically applied by suppliers, including to customers already on a fixed deal — not just those on the capped default tariff. Check your first bill after 1 October to confirm it's actually shown up.
The Warm Home Discount reopens this month
Separately from the cap, the Warm Home Discount Scheme reopens in October for winter 2026–27. It's a one-off £150 reduction on your electricity bill (or gas, if your supplier provides both and you're eligible), and for most people it's applied automatically — no application needed if you're on a qualifying benefit and your supplier already has your details.
It doesn't affect Winter Fuel Payment or Cold Weather Payment eligibility. If you weren't sure whether you qualified last winter, it's worth checking again once the scheme reopens, since eligibility rules have shifted in recent years.
Should you fix your tariff now?
Ofgem's own comment on the announcement is that fixed deals were available at £100 or more below the new cap at the time it was published — worth checking, since that gap can close or widen depending on how wholesale prices move.
A few pointers rather than a single answer:
- On the default tariff and haven't compared in a while? Run your actual usage — not the typical-household figure — against the current best fixes. A gap of £100-plus is worth locking in; a narrow gap is a weaker case.
- On a fix ending within the next three months? Line up the next deal now, with a start date matching your end date, so you don't roll onto the cap in the gap.
- On a fix with plenty of time left? Check the exit fee before doing anything. Breaking a fix early rarely pays once the fee is factored in.
Compare against your own consumption, not the national averages — if you use noticeably more or less than typical, the headline cap figure tells you very little about what you'll actually pay. For a worked example of the fix-vs-stay maths, see our earlier guide on whether to fix before Ofgem's price cap decision.
What's worth doing before 1 October
Four practical steps, in order:
- Send a meter reading on or just before 30 September. That locks in your usage at July's rates before the new prices start. Without one, your supplier estimates the split, and estimates rarely land in your favour.
- Check your direct debit. If your supplier proposes an increase that looks bigger than the 4% cap rise alone explains — especially if your account's already in credit — ask them to show their working.
- Check your first October bill for the VAT change. Confirm the electricity VAT has actually come off, whether you're on the cap or a fix. It should happen automatically, but it's worth a look.
- If you might be eligible, watch for the Warm Home Discount reopening. Most eligible households get it without applying, but it's worth checking your supplier's site once the scheme is live for October.
Keeping track of tariff changes, meter reads, and scheme deadlines like this across the year is exactly the kind of admin that slips — until it costs you. That's what The Home Concierge is built to catch.
The October cap is confirmed, the VAT cut is real but narrow, and gas is the part that's actually rising. A 20-minute review before 1 October — meter read, direct debit check, fix comparison — is worth more than the £5 a month the headline suggests.