📅How the Quarterly Cap Cycle Works
Ofgem reviews the energy price cap every three months, recalculating it largely from wholesale energy costs over a set observation window. Each new level is announced roughly five weeks before it takes effect — which means at any given moment there's one confirmed cap and one or two forecast caps doing the rounds in the news.
Here's the timeline as it stands:
The current cap — covering 1 July to 30 September 2026 — sits at £1,663/year for a typical household, a 13% rise from April's £1,489, with electricity at 26.11p/kWh and gas at 7.33p/kWh. Everything beyond 30 September is a forecast until Ofgem confirms it. One honesty note before we go further: the forecasts on this page were current as of 7 August 2026 — we'll update this guide as new numbers land, and the 26 August announcement will settle the October figure for good.
🔮What Forecasters Expect for October 2026
Cornwall Insight — whose pre-announcement estimates have historically landed within a few pounds of Ofgem's confirmed figures, and who called October to within £14 — now predicts the January–March 2027 cap at around £1,872/year on Ofgem's current consumption basis. That is a further rise of roughly 8.7% on October's confirmed £1,723, and it lands at the coldest point of the year. On Ofgem's old basis the same forecast reads as £2,107 — always check which one a figure uses.
That forecast has moved a long way in a short time, and it's worth knowing why before you compare it to anything you read in the spring. Cornwall Insight previously had October at £1,906. Two things brought it down: the cut in electricity VAT to 0% from 1 October, and Ofgem's revised typical-household consumption figures. Neither is a fall in the price of energy — one is a tax change, the other a change of yardstick.
A 2% nudge sounds modest after a 13% jump, but Cornwall Insight's Craig Lowrey has warned the October rise may feel harder than July's — because it lands just as the heating season begins. The same unit rates hurt far more in November than they do in August, when usage is at its lowest.
And the usual caveat applies, doubly so right now: this is a forecast, not a confirmed figure. Wholesale costs make up over 40% of the cap and have been climbing with the Middle East conflict. The January window is still open, so the confirmed number could land either side of £1,872 — there is far more room for movement here than there was for October by late August, and forecasts this far out have historically moved by tens of pounds before settling.
🧮Why the Cap Figure Changed — Same Prices, New Maths
This is the single most confusing thing in energy pricing right now, so let's defuse it. On 1 July 2026, Ofgem updated its typical domestic consumption values — the amount of gas and electricity its illustrative "typical household" is assumed to use. Households have been using less energy year on year, so the benchmark was refreshed downwards:
- Electricity: 2,700 → 2,500 kWh a year — a 7% reduction
- Gas: 11,500 → 9,500 kWh a year — a 17% reduction
The result is that every headline cap figure got smaller without any price changing. The July cap announced as £1,862 is now quoted as £1,663. April's £1,641 restates to £1,489. Ofgem now publishes all cap levels on the new basis and restates historic ones so that quarter-on-quarter comparisons still work.
The key point: unit rates aren't falling — the "typical household" is just assumed to use less.
The cap limits unit rates and standing charges, not your total bill. The headline annual figure is just those rates multiplied by an assumed typical usage. Shrink the assumed usage and the headline number shrinks too — while the prices you actually pay per kWh stay exactly where the forecast puts them. If your own usage doesn't change, your bill doesn't fall by a penny.
One caveat Ofgem also flagged: because a slice of network and supplier costs is recovered through unit rates rather than standing charges, spreading those costs over lower assumed consumption nudged the unit rates themselves up slightly — around 0.8% on electricity and 1.3% on gas. Small, but it means the change wasn't purely cosmetic for everyone.
The practical rule: never compare an annual cap figure to one published before July 2026 without checking which basis it uses. A lot of comparison sites and news archives still quote the old numbers, and mixing the two makes a flat cap look like a £200 fall. Every figure on this page uses the new basis.
📉Will Energy Prices Go Down in 2026?
The honest answer: probably not this year, but nobody can promise either way. The cap is driven overwhelmingly by wholesale costs — over 40% of the total — and those have climbed with the ongoing conflict in the Middle East. As long as that geopolitical risk premium sits in the gas market, a meaningful fall is hard to forecast with confidence.
What we can say from the current picture: July brought a confirmed 13% rise, October is forecast to add roughly another 2%, and the January–March 2027 cap is too far out to call — Ofgem won't announce it until around late November 2026, and forecasts that far ahead routinely move by tens of pounds. There is no guaranteed fall on the horizon.
But markets cut both ways. The spring showed it — the April 2026 cap actually fell to £1,489 before July's reversal. If the geopolitical pressure eases, wholesale prices can drop quickly — and the people who benefit fastest are those on tariffs that pass falls through immediately rather than waiting for the next quarterly cap. More on that next.
🤔Should You Fix or Stay Flexible?
With a further rise forecast for October, this is the question that matters. Around 40% of accounts — some 22 million — are already on fixed tariffs and won't feel cap moves at all. For everyone else, here's the balanced version:
- Fixing buys certainty — lock rates now and neither October's confirmed £1,723 nor a January forecast near £1,872 can touch you, right through heating season. With that second jump on the table, Martin Lewis has said people on the cap should fix — see our fixed vs variable guide
- The catch: fixes priced today bake in elevated wholesale costs — if the geopolitical premium unwinds and prices fall, you could be stuck above the going rate (check exit fees before signing)
- Smart tariffs are the other side of the bet — Octopus Tracker follows wholesale prices daily and Agile Octopus reprices every half hour, so any wholesale fall reaches your bill immediately instead of waiting months for the next cap — with built-in price ceilings protecting you from spikes
- You don't have to decide forever — Octopus charges no exit fees on variable tariffs, so you can sit on Flexible Octopus through the 26 August announcement and then fix or go smart with full information
If certainty before winter is what helps you sleep, fix. If you believe forecasts can move in both directions and your household can be a little nimble, flexible and smart tariffs keep you positioned for the upside. The only clearly bad strategy is drifting on an average supplier's default tariff and taking every rise at full force.
🛡️How to Protect Yourself Whatever Happens
Forecasts will wobble between now and the late-November announcement — but these four moves pay off whether January lands at £1,872, higher, or lower:
Switch and bank £50 credit
Switching to Octopus via our referral link takes around 5 minutes and puts £50 free credit in your account — a buffer against the October rise before it even arrives, with no exit fees on variable tariffs.
How switching works →Pick the right tariff for your home
The cap is a ceiling, not a target. Smart tariffs like Tracker follow wholesale prices daily and pass falls through immediately — and stack with every other saving on this list.
Octopus Tracker explained →Get a smart meter
Smart tariffs need one, and even on a standard tariff a smart meter ends estimated bills and shows exactly where your money goes — the foundation for everything else here.
Smart meters guide →Cut the usage itself
The cap limits unit rates, not your bill — so every kWh you don't use is saved at the full October rate, whatever it turns out to be. Small efficiency wins compound fast in heating season.
Saving money guide →✅Verdict — Plan for the Forecast, Don't Bet on It
Verdict: October came in at £1,723. January is the one to plan for.
Ofgem confirmed October–December at £1,723 on 26 August, up 3.6%, with Cornwall Insight £14 under. The forecast that matters now is January–March 2027 at around £1,872 — a further 8.7% landing exactly when heating season makes every unit rate bite hardest. Ofgem confirms it in late November. Older figures like £1,899 or £1,906 aren't wrong so much as out of date: they predate both the 0% electricity VAT and Ofgem's new typical-consumption maths, which together took roughly £200 off every headline cap figure without changing a single unit rate. With no guaranteed fall in sight, the smart play is the one that wins in every scenario: bank the £50 switching credit, get on the right tariff, and cut the usage the cap can't touch.
Octopus Energy supplies 7.3 million UK households with 100% renewable electricity, has been Which? Recommended for 9 consecutive years, and holds a 4.8/5 Trustpilot rating from 800,000+ reviews. Whatever Ofgem announces on 26 August, our saving money guide shows how to stack the £50 credit with the tariff that fits your home — and we'll update this page the moment the forecasts change.