UK Energy Price Cap to Rise 4% in October, Affecting Millions of Households

Millions of households in Great Britain on default energy tariffs will see their bills rise by 4% from October 1, 2026, according to an announcement on Wednesday. The increase reflects an adjustment in the country's energy price cap, driven by higher wholesale gas costs.

New Price Cap Details

The revised price cap will be in effect from October 1, 2026, through December 31, 2026. For a typical household paying by direct debit on a standard variable tariff, the new average rates across England, Scotland, and Wales will be:

• Electricity: 26.32 pence per kilowatt-hour (kWh) with a daily standing charge of 54.83 pence.
• Gas: 7.97 pence per kWh with a daily standing charge of 29.68 pence.

This change affects customers on default tariffs, including those paying via standard credit, direct debit, prepayment meters, or Economy 7 meters. Customers on fixed-rate contracts are not impacted by the price cap adjustment.

Driving Factors and Government Measures

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The primary reason cited for the higher cap is a rise in wholesale natural gas prices, which the report attributes to ongoing conflict in the Middle East. Despite the upcoming increase, energy costs remain below the peaks experienced during the 2022 energy crisis, which prompted the government to introduce a temporary £2,500 bill cap.

To help offset the cost increase, the UK government announced that Value Added Tax (VAT) will be waived on electricity bills from October 1, 2026, to March 31, 2027. The standard 5% VAT rate on natural gas bills will remain in place.

Regulatory Outlook

The UK's energy regulator reviews and updates the price cap on a quarterly basis to reflect shifts in the wholesale energy market and other operational costs. The next announcement, which will determine the price cap for the period from January 1, 2027, to March 31, 2027, is scheduled to be released by November 25, 2026.