🔍What We Know So Far
In force: £1,723 a year since 1 October 2026.
Ofgem published the cap for 1 October to 31 December 2026 on Wednesday 26 August 2026. A typical dual-fuel household paying by monthly Direct Debit will pay £1,723 a year — up 3.6%, or about £60, on the £1,663 running since July. Ofgem rounds that to 4%. Every figure below is now the confirmed rate rather than a forecast.
To read the rise properly you need the baseline. Under the July 2026 cap, a typical dual-fuel household paying by direct debit faces £1,663 a year — a 13% rise on the April–June quarter, which restates to £1,489 on the same basis. Those are the rates you pay until 30 September; the new ones take over the next day.
If those figures look lower than the ones you remember, that's the yardstick moving rather than the price. From 1 July 2026 Ofgem updated its typical domestic consumption values to reflect how much less energy households now use — electricity down from 2,700 to 2,500 kWh a year, gas from 11,500 to 9,500 kWh. The identical cap that was announced as £1,862 on the old basis is quoted as £1,663 on the new one, and April's £1,641 becomes £1,489. Your unit rates are unaffected; only the illustration changed.
The two columns above are not like for like on electricity, and this is the single most misreported detail of this announcement. Ofgem quotes cap rates including VAT. July's 26.11p includes 5% VAT; October's 26.32p includes 0%, because the electricity VAT cut lands on the same day. So the underlying pre-tax electricity price rose considerably more than the 0.8% headline suggests — the tax cut is absorbing most of it. Gas keeps its 5% VAT throughout, so the gas figures do compare directly, and that 8.7% jump is entirely real.
Ofgem has confirmed the cap would have risen by around 6% without the VAT cut, which makes the electricity relief worth roughly 2.5 percentage points off the headline. It is a genuine saving. It just arrived as a smaller rise rather than as money back.
🗓️When Is the October Price Cap Announced?
Ofgem sets the cap quarterly and announces each level roughly five weeks before it takes effect. The October–December 2026 level was confirmed on 26 August 2026 and took effect on 1 October 2026. The January–March 2027 cap follows in late November.
The level isn't plucked from the air on announcement day — it's calculated from costs observed during a fixed assessment window running 19 May to 18 August 2026. That window is the reason forecasts tighten as summer goes on: with every week of wholesale market data that lands inside it, less of the calculation is guesswork.
📊Forecast vs Confirmed — How Close Were They?
Now the cap is confirmed, the forecasts can be marked. We publish this because a forecaster's track record is the only sensible basis for judging their next prediction — and there are already January 2027 forecasts on the table.
The consultancy most widely quoted on cap forecasting landed within £14 of Ofgem, or under 1%. That is a good result and consistent with their record: their pre-announcement estimates have repeatedly come within a few pounds. Their published January figure was calculated before wholesale gas jumped in September, though, so for January we now quote the latest round of forecasts instead.
The gas unit rate rose 8.7% while electricity rose 0.8% and the electricity standing charge fell 4.1%. Wholesale gas firmed through the assessment window, driven partly by unrest in the Middle East, and gas is where that fed through. A household heating with gas therefore feels this rise far more than an all-electric one.
Ofgem has said the cap would have risen around 6% without the electricity VAT cut, so the relief is worth roughly 2.5 percentage points. It is real money, but it arrived as a smaller increase rather than as a reduction — which is why the government's headline £45 saving and what people actually see on their bills are different things.
The latest forecasts — British Gas £2,185 on 15 October and E.ON Next £2,130 on 12 October, with EDF at £2,083 (6 October) and Cornwall Insight at £1,999 (30 September) — put January roughly 16% to 27% above October's £1,723, and about 25% at the centre, far bigger than this rise. Wholesale gas has jumped with the conflict in the Middle East. Ofgem's assessment window runs to mid-November and it confirms the January cap in late November; this is a forecast, not a decision.
The confirmed rise is 3.6% — about £5 a month on a typical bill. Modest in isolation. What changes the picture is the January forecast sitting behind it: forecasts now put January at around £2,130–£2,190 — roughly 25% above October, adding about £430 a year — after British Gas and E.ON Next raised their forecasts in mid-October. That lands in the depth of winter when consumption is at its highest.
That combination is why the fixing argument has strengthened. Fixes are no longer cheaper than the cap, though: Octopus's 12M Fixed works out at about £1,900 a year, around 10% above October's £1,723 but roughly £250 below the January forecast. Martin Lewis's advice is to compare the whole market for the cheapest fix. Our guide on whether to fix works through when locking in genuinely earns its keep — and when it doesn't.
If you want to understand how these forecasts are built and how well they've held up historically, our price cap predictions guide walks through the mechanics.
🧾The Electricity VAT Cut Lands on the Same Day
This is the part that will make October's headline numbers confusing, so it's worth getting straight now. On 21 July 2026, new Prime Minister Andy Burnham announced that VAT on domestic electricity will be cut from 5% to 0%, running from 1 October 2026 to 31 March 2027.
Two things to be clear about. First, it applies to electricity only — gas keeps its 5% VAT. Second, it started on 1 October 2026, the exact same day the new price cap took effect.
Why the headline numbers look odd
Ofgem's cap figures normally include 5% VAT — July's 26.11p/kWh electricity rate was a VAT-inclusive number. Since 1 October, electricity rates under the cap are restated without VAT. So you may see an electricity unit rate that looks lower than July's even if the underlying wholesale-driven cost has gone up. A cap rise and a tax cut arriving on the same date can partly cancel each other out on paper.
- Don't compare October's electricity rate directly to July's — one includes VAT, the other won't
- Gas is unaffected — the 5% VAT stays on gas, so any gas movement in the cap is a clean comparison
- The relief is temporary — it currently runs only to 31 March 2027, so electricity costs step up again next April on top of the gas-driven rise forecast for January
- Electricity-heavy homes gain most — heat pumps, EVs and all-electric properties see proportionally more benefit than gas-heated ones
Our full electricity VAT cut guide breaks down what the change is worth to different household types and how it interacts with smart tariffs.
🏠What It Means for a Typical Household
If the central forecast is roughly right, a typical household is looking at around £3 a month more — a figure that is already net of the VAT cut, which pushes in the opposite direction on the electricity half of your bill. That's a materially smaller swing than the 13% jump in July.
But the timing matters more than the size. October is when heating goes back on. Even an unchanged cap means bills climb sharply in real terms through autumn simply because you're using more energy — and the October rates run through the whole of the first winter quarter.
The perennial point worth repeating: the price cap is not a cap on your total bill. It limits the unit rates and standing charges a supplier can charge on a default tariff. The typical-household figure is an illustration of what average usage costs, nothing more. Use less and you pay less — which is why the actions that reduce winter bills are the same regardless of what the January cap is announced in late November.
🤔Should You Fix Before October 2026?
October is confirmed; January is forecast around 25% higher but won't be confirmed until late November. This is a genuine judgement call rather than a question with an obvious answer. The honest version:
- January is the case for fixing — Octopus's 12M Fixed (about £1,900 a year) costs roughly £177 a year more than October's cap but about £250 less than the ~£2,150 January forecast, so it costs a little more for three months and should save from January if the forecasts hold
- Fix anyway if certainty has real value to you — a tight budget with no headroom for a winter surprise is a perfectly good reason, and it doesn't require you to have a view on wholesale gas
- The catch: fixed deals priced now already reflect the market's expectations — which is why fixes now sit above October's cap — so if January comes in lower than forecast, the saving shrinks
- The VAT is not a wrinkle: VAT is a tax on the supply, not part of your tariff, so the 0% rate has reached fixed customers too since 1 October — your locked rate excluding VAT stays put and the amount you pay falls
- Smart tariffs are the third route — Octopus tariffs like Tracker and Agile follow wholesale prices, so they respond to market falls immediately rather than waiting for the next quarterly cap
- Changing your mind has a price — Octopus's variable tariffs have no exit fees, but its 12M Fixed charges £50 per fuel (£100 dual fuel) to leave early, at the low end of the usual £25–£150 range, and nothing in the final 49 days
There isn't a universally right answer here — our fixed vs variable guide walks through the comparison properly, and the Octopus Fixed page covers the rates. What is clear is that sitting on a default tariff with an expensive supplier is the one option that loses in every scenario.
⚡How to Get Ahead of the October Cap
You can't control what Ofgem announces, but you can control what it applies to. The cap is a ceiling on default tariffs — it says nothing about how low your rates can go. And with electricity VAT dropping to zero from the same day, tariffs that lean on electricity get a second tailwind:
Your unit rate moves with the wholesale market each day, so you don't wait a full quarter for falls to reach you — and because the October cap is now locked to a window that has closed, a Tracker customer feels any autumn softening months before a Flexible customer does. Built-in caps of 100p/kWh electricity and 30p/kWh gas protect against extreme spikes.
Prices change every 30 minutes and drop well below cap level overnight and when renewable generation is high. Shift the dishwasher, washing machine and charging into cheap slots and your effective rate falls — whatever the headline cap does in October.
For EV drivers this is the clearest cap-beater: overnight charging at around 7p/kWh against a cap electricity rate of 26.11p/kWh, with smart scheduling handled automatically. As an electricity-only tariff, it also benefits fully from the 0% VAT change.
Discounted scheduling windows sized to heat pump running patterns, typically saving around £219/year versus a gas boiler. With gas keeping its 5% VAT while electricity drops to 0%, the arithmetic for electrified heating improves further from 1 October.
Four things still worth doing this autumn:
- Watch for your Warm Home Discount letter — if you were on means-tested benefits on 23 August, the £150 discount is paid automatically in England and Wales, with letters from 20 October; 2.7 million more households now qualify
- Switch and bank the £50 — the referral credit is certain in a way no forecast is, and it lands in your account when you switch via our link
- Submit a meter reading now if you haven't — so your pre-October usage is billed at the old rates rather than estimated across the boundary, and do the same on 31 December before January's rise
- Check when your fix ends — if it expires this autumn, you'll roll onto a cap-governed variable tariff, so decide before that happens by default
Our saving money guide covers stacking the £50 credit with the right smart tariff and Octoplus rewards, and how switching works walks through the five-minute process end to end.
✅Verdict — Prepare, Don't Predict
Verdict: A manageable rise now, and a much larger one forecast for January. That is the part worth acting on.
Ofgem confirmed the October–December cap on 26 August at £1,723, up 3.6% on July's £1,663 — about £5 a month. Gas drove almost all of it, rising 8.7%, while the electricity standing charge fell 4.1% and the 0% VAT absorbed what would otherwise have been a roughly 6% increase. Taken alone that's a rise most households can absorb. The reason to act is what comes next: forecasts put January at around £2,130–£2,190, roughly 25% higher, arriving exactly when winter consumption peaks. If you fix, compare the whole market and check the exit fee alongside the rate — Octopus's 12M Fixed is about £1,900 a year with a £50-per-fuel exit fee.
Octopus Energy supplies 7.3 million UK households, has been Which? Recommended for 9 consecutive years, and holds a 4.8/5 Trustpilot rating from 800,000+ reviews — with no exit fees on its variable tariffs (its 12M Fixed charges £50 per fuel). Compare every Octopus tariff before January, and check back in late November for Ofgem's confirmed January cap.
Every figure on this page is built into our savings calculator, which runs your own usage at the October rates, compares it with Fixed and Intelligent Go, and shows what the January forecast would add. Existing Octopus customers who want to fix before January can take Loyal Octopus from their account; the news hub will carry Ofgem's January announcement on the day in late November.
Sources: Ofgem — energy price cap · MoneySavingExpert — energy price cap predictions. Figures last checked September 2026.