Energy price cap explained: what £1,723 means for your bill
The October to December 2026 price cap is £1,723 for a typical home. The unit rates, how to work out your own bill, and the January 2027 forecasts.
Numbers checked against official sources on 7 October 2026
In 30 seconds
- From 1 October to 31 December 2026 the price cap is £1,723 a year for a typical home paying gas and electricity by Direct Debit, up 4%.
- The cap limits the price per unit and the daily standing charge, not your total bill. Use more, pay more.
- Average rates: electricity 26.32p per kWh plus 54.83p a day; gas 7.97p per kWh plus 29.68p a day.
- There is no VAT on household electricity from 1 October 2026 to 31 March 2027.
- Ofgem will set the January–March 2027 cap by 25 November. Forecasts point to a rise.
“The price cap” is quoted in every headline about energy bills, but the headline number is not what you pay. This guide explains what the cap actually limits, gives you the current rates, shows how to turn them into your own annual bill, and sets out what the forecasts say about January.
On this page
What the price cap is, and what it isn’t
The energy price cap is set by Ofgem, the energy regulator for Great Britain. It sets the maximum a supplier can charge for each unit (kWh) of gas and electricity, and the maximum daily standing charge, on a default or standard variable tariff. Ofgem reviews it every three months.
It is not a cap on your bill. The £1,723 figure is simply what the capped rates add up to for a household with “typical” usage. Ofgem says the cap protects around 22 million households on default tariffs. About 35% of households, around 11 million, are on fixed tariffs and are not affected by the change until their fix ends (Ofgem, 26 August 2026).
The cap covers England, Scotland and Wales. Northern Ireland has a separate energy market.
The rates from 1 October 2026
These are Ofgem’s average figures for Direct Debit customers. Your exact rates depend on your region and how you pay.
| Jul–Sep 2026 | Oct–Dec 2026 | |
|---|---|---|
| Electricity unit rate | 26.11p/kWh | 26.32p/kWh |
| Electricity standing charge | 57.19p/day | 54.83p/day |
| Gas unit rate | 7.33p/kWh | 7.97p/kWh |
| Gas standing charge | 29.04p/day | 29.68p/day |
| Typical annual bill | £1,663 | £1,723 |
Notice what moved. Almost all of the rise is gas: Ofgem says gas bills go up about 8%, while electricity stays broadly stable because VAT has been removed. A home that uses no gas sees a rise of less than 1%.
How to work out your own bill
Your annual bill is your usage multiplied by the unit rate, plus 365 days of standing charge, for each fuel:
Annual cost = (kWh used × unit rate) + (365 × daily standing charge)
Here is the sum for Ofgem’s typical home, which uses 2,500 kWh of electricity and 9,500 kWh of gas a year:
| Usage | Unit cost | Standing charge | Total | |
|---|---|---|---|---|
| Electricity | 2,500 kWh | £658.00 | £200.13 | £858.13 |
| Gas | 9,500 kWh | £757.15 | £108.33 | £865.48 |
| Total | £1,723.61 |
To do it for your home, find your annual usage in kWh on your bill or supplier app (often called “annual consumption” or “estimated annual usage”) and swap your numbers in. Remember that the standing charge is paid even in a month when you use nothing.
Why the “typical home” changed in July
If £1,723 looks low compared with older headlines, there is a reason. In July 2026 Ofgem cut its definition of typical usage, because households now use less energy than before:
- electricity: from 2,700 kWh to 2,500 kWh a year;
- gas: from 11,500 kWh to 9,500 kWh a year.
The rates did not get cheaper; the example household got smaller. Ofgem says that on the old definition the October cap would be £1,935, not £1,723. So be careful comparing today’s figure with headlines from 2025 or early 2026.
What happens in January 2027?
Ofgem will confirm the cap for 1 January to 31 March 2027 by 25 November 2026. Until then there are only forecasts, and they vary a lot. These were published in September 2026, as reported by IBTimes:
| Forecaster | January–March 2027 forecast | Change vs £1,723 |
|---|---|---|
| Cornwall Insight (23 Sept) | £1,872 | +£149 |
| Uswitch average of supplier forecasts (23 Sept) | £2,117 | +£394 |
| EDF (17 Sept) | £2,165 | +£442 |
The spread of almost £300 tells you how uncertain wholesale gas prices are. All three point the same way, though: up. Ofgem has said the October rise was driven by higher wholesale gas prices linked to the conflict in the Middle East.
Should you fix your tariff?
Ofgem says fixed tariffs are available at £100 or more below the October cap. Whether fixing is right for you depends on a few things (our fixed vs variable guide goes into more detail):
- Compare the annual cost, not the unit rate. Put your own kWh usage into the formula above for both tariffs, including standing charges.
- Check exit fees. If prices fall, an exit fee decides whether you can switch away cheaply.
- Look at the length. A 12-month fix taken now covers January to March, which is when forecasts expect the biggest rise.
- Check for time-of-use options. Ofgem notes that many suppliers sell cheaper off-peak electricity to smart meter customers. That matters most if you have, or plan, a heat pump, an electric car or a battery.
Ofgem also says prepayment customers pay the lowest capped rates, about £45 a year less than Direct Debit on average.
Thinking of a heat pump? See how it would compare with your gas boiler at these rates.
See the running cost comparisonFrequently asked questions
Is the price cap the most I can pay for energy?
No. It caps the unit rates and standing charges on default tariffs. Your bill depends on how much you use, so a large or poorly insulated home can pay far more than £1,723.
Why did my electricity bill not go down when VAT was removed?
Wholesale costs went up at the same time. Ofgem says that without the VAT removal the October cap would have been around £45 higher for a typical home.
Does the price cap affect me if I am on a fixed tariff?
Not until your fixed deal ends. The VAT removal on electricity applies to fixed tariffs too, automatically.
When is the next price cap announcement?
Ofgem will confirm the January–March 2027 cap by 25 November 2026. The cap is reviewed every three months.
Why is my standing charge different from the average?
Standing charges vary by region, because they cover the cost of the local network and how many people share it. Ofgem publishes the rates for every region.
