Ofgem’s October energy cap rises to £1,723: what changes for household bills

Ofgem’s energy price cap will rise by 4% on 1 October, taking the typical annual bill for a household paying by direct debit to £1,723 in England, Scotland and Wales. The increase matters to households on standard variable tariffs as colder months approach, but £1,723 is an illustration based on typical use, not a ceiling on what any household can pay.

The new cap runs from 1 October to 31 December 2026. Skint Dad’s 28 September explanation puts the previous typical figure at £1,663, making the new figure £60 higher on an annualised basis. That does not mean a household will be charged an extra £60 during those three months, or that its monthly direct debit will automatically rise by £5.

What the published rates show

Ofgem caps the price of each unit of gas and electricity and the daily standing charges on covered tariffs. A standing charge is paid each day to maintain a connection, regardless of how much energy is used. A household’s total bill still rises or falls with consumption; the published annual figure combines the capped rates with an estimate of typical use.

For direct debit customers, Ofgem’s average electricity unit rate rises from 26.11p to 26.32p per kilowatt hour. The average electricity standing charge falls from 57.19p to 54.83p a day. These are averages across the areas covered by the regulator, rather than a promise that every household will see those exact rates.

Why the cap rises despite the VAT cut

Domestic electricity has no VAT from 1 October 2026 through 31 March 2027, according to Ofgem’s rate page, while gas rates include 5% VAT. The electricity tax change moderates the new cap, but the increase in gas costs outweighs it for a typical dual-fuel household. Skint Dad reports that a household without gas should see a much smaller increase under the cap.

Energy UK, the suppliers’ trade association, attributes volatility in wholesale gas prices to the Middle East conflict. In a briefing updated on 15 September, it said gas prices that month reached their highest point since December 2022. Its account provides context for the increase, although the actual cost to a household still depends on its tariff and energy use.

Energy UK says around 2% of UK gas supplies come from Gulf countries. It says most supplies come from the North Sea, Norway and Europe, with liquefied natural gas imports mainly from the United States. The association’s explanation is that international wholesale prices can affect British bills even though only a small share of the gas supply comes directly from the Gulf.

Which households are affected

The cap covers default or standard variable tariffs in England, Scotland and Wales. Ofgem publishes different rates by region and payment method, so people who pay on receipt of a bill or use prepayment meters should check the rates for their own arrangements rather than assume the direct debit averages apply. Northern Ireland has a separate energy pricing system.

Customers on fixed deals are not subject to this particular cap increase, Skint Dad reports. It says suppliers are expected to pass the electricity VAT reduction on to those customers too. The effect on any fixed-deal bill therefore cannot be read from the £1,723 figure, which describes a typical household under the capped rates.

The comparison also needs a consistent definition of typical use. Skint Dad says Ofgem changed its estimate of how much energy a typical household consumes. It warns against comparing the October figure of £1,723 directly with an older July headline of £1,862; on the updated basis, the relevant comparison is £1,663 to £1,723. Ofgem also cautions that the change in electricity VAT treatment limits direct comparisons between periods.

What happens next

The new rates take effect on 1 October. Skint Dad advises customers to check their tariff and payment method and, where possible, submit a meter reading on 30 September so usage can be allocated between the old and new rates. A household’s eventual bill will reflect its actual consumption and applicable regional and payment rates, rather than the headline annual estimate.

The following cap period begins in January 2027. Energy UK says its level will depend on how long wholesale prices remain high. The October announcement therefore establishes the rates for the final three months of 2026; it does not establish what households will pay under the next cap.