Quick answer: the Ofgem price cap limits the unit rate and standing charge that suppliers can charge on default tariffs. It does not limit your total bill. From 1 October to 31 December 2026 the average electricity rate is 26.32p per kWh with a 54.83p per day standing charge (no VAT on electricity until 31 March 2027). For a typical dual-fuel household paying by Direct Debit, Ofgem’s headline figure is £1,723 a year, up 4% from £1,663.
Last checked: 1 October 2026. Figures are Ofgem’s averages for England, Scotland and Wales on a standard variable tariff paid by Direct Debit. See Ofgem’s announcement and rates by area.
What is the Ofgem price cap and how does it affect my bills?
Your energy supplier sets two prices for each tariff: a unit rate (the cost of each kilowatt hour, or kWh, you use) and a standing charge (a daily amount you pay even on a day you use no energy). Ofgem, the energy regulator, sets the energy price cap: the maximum a supplier can charge for a unit of energy and the standing charge together on a default tariff.
The cap does not limit your total bill. A household that uses more energy pays more. Your bill is roughly:
Bill = (kWh used × unit rate) + (number of days × standing charge)
So the cap affects you in three ways:
- It sets the ceiling on your rates if you are on a default (standard variable) tariff. When the cap changes, your unit rate and standing charge change with it.
- It changes every three months, so a bill for winter can be priced differently from one for summer.
- It varies by where you live, how you pay (Direct Debit, standard credit or prepayment meter), the fuel (gas or electricity) and the type of meter you have.
Ofgem builds the cap from wholesale energy costs, network costs, government policy costs, supplier operating costs, a profit allowance and a safety margin for uncertain costs.
Who it protects: people on default tariffs, whether they pay by standard credit, Direct Debit, prepayment meter or Economy 7. Who it does not cover: people on a fixed tariff, a business energy contract, a heat network or heating oil. Unit rates and standing charges are explained further in our guide to electricity unit rate vs standing charge → .
Ofgem energy price cap rates from 1 October 2026
| 1 October to 31 December 2026 | Electricity | Gas |
|---|---|---|
| Unit rate (average) | 26.32p per kWh | 7.97p per kWh |
| Standing charge (average) | 54.83p per day | 29.68p per day |
| VAT | Not included until 31 March 2027 | 5% included |
These are averages for a standard variable tariff paid by Direct Debit in England, Scotland and Wales. Your own rates depend on your region, payment method and meter, so check your bill or Ofgem’s rates by area.
Ofgem price cap reduction: is the cap going down?
Not overall. Ofgem announced that energy prices for a typical household using gas and electricity and paying by Direct Debit will rise by 4% from 1 October 2026. The typical annual figure moves from £1,663 to £1,723, which Ofgem puts at £60 a year, or about £5 a month, if that level were sustained for a year. Ofgem says the rise is mainly driven by higher wholesale gas prices.
Electricity is a different story, which is why you may see “reduction” in headlines:
- VAT on electricity has been removed from 1 October 2026 to 31 March 2027. Ofgem says this means households on default tariffs pay less for electricity than they otherwise would, and people who use mostly or only electricity see a bigger benefit.
- Households without gas see a much smaller change than gas users, because most of the increase comes from gas.
- Ofgem warns that costs cannot be compared directly with earlier periods because of the VAT change.
- The “typical household” has changed. In July 2026 Ofgem lowered the typical use figures used for the headline (about 7% less electricity and 17% less gas), so headline totals are not directly comparable with earlier years.
Ofgem also says you may not see the full effect of lower electricity VAT on your bill, because gas wholesale prices remain high.
How much will my energy bills cost this year?
The honest answer is “it depends on you”, but you can get a useful estimate in three steps.
- Find your usage. Your bill, supplier account or smart meter shows kWh used per year.
- Use your rates. Take the unit rate and standing charge from your bill, or Ofgem’s averages above.
- Apply the formula. Multiply usage by the unit rate and add the standing charge for each day.
As an illustration, here is electricity only at Ofgem’s current average rates (26.32p per kWh and 54.83p per day for 365 days, which is about £200 a year in standing charges):
| Electricity used per year | Usage cost | Plus standing charge | Approximate total | Approx. per month |
|---|---|---|---|---|
| 1,500kWh | £394.80 | £200.13 | £595 | £50 |
| 2,500kWh | £658.00 | £200.13 | £858 | £72 |
| 3,500kWh | £921.20 | £200.13 | £1,121 | £93 |
These are illustrations, not forecasts. The cap changes every three months, and your own rates and usage will differ. You can test your own numbers in the estimator below.
Price cap bill estimator
Enter your yearly usage to see what it would cost at Ofgem's average price cap rates for 1 October to 31 December 2026. Replace the rates with the ones on your own bill if they differ. This is an illustration, not a forecast, because the cap changes every three months.
Electricity (usage + standing charge): £0.00 per year
Gas (usage + standing charge): £0.00 per year
Total: £0.00 per year, about £0.00 a month
Of which standing charges: £0.00 per year
Assumes 365 days at the rates entered, with no discounts, credits or changes to the cap during the year.
How Ofgem’s £1,723 fits in: it assumes typical gas and electricity use. Applying about 2,500kWh of electricity and 9,500kWh of gas to the rates above gives a figure within £1 of Ofgem’s headline, which is a useful check that the average rates and the typical bill agree. Your home may use far more or less.
Should I fix my energy tariff or stay on the price cap?
We cannot tell you which is better for your household, and this is not financial advice. What we can set out are the factors, based on how each type of tariff works.
| Stay on the price cap (default tariff) | Fix your tariff | |
|---|---|---|
| Rates | Follow the cap and change every three months | Held for the fixed term |
| Affected by Ofgem’s changes? | Yes, up or down | No, until the deal ends |
| Total bill | Still depends on how much you use | Still depends on how much you use |
| Things to check | Whether current deals beat the cap for your usage | Unit rate, standing charge, length, exit fees and what happens when it ends |
Questions worth asking before you decide:
- What would each option cost at your usage? Multiply your annual kWh by the unit rate and add the standing charge for each day, as in the formula above. A fixed deal with a low unit rate but a high standing charge can suit some homes better than others.
- Is the fixed deal actually below the cap? Fixed deals can be cheaper or more expensive than the cap, and availability changes often.
- What are the exit fees and end date? Some deals charge to leave early, and you should know what rate you move to when the term ends.
- How comfortable are you with price changes? A fixed rate offers certainty; a default tariff can fall as well as rise. Forecasts for future caps change, and Ofgem’s next announcement is on 25 November 2026.
Ofgem says you could pay less by changing your tariff or payment type, and explains how to switch supplier. We deliberately do not recommend suppliers on this site.
When does the price cap change next?
Ofgem reviews the cap every three months and may publish earlier if external events require it.
| Announcement date | Period covered |
|---|---|
| 25 November 2026 | 1 January to 31 March 2027 |
| 23 February 2027 | 1 April to 30 June 2027 |
| 26 May 2027 | 1 July to 30 September 2027 |
Using the price cap to work out what appliances cost
The price cap is useful for more than your bill. The unit rate is the figure that decides what an appliance costs to run, and the standing charge should be left out because it does not rise when an appliance runs longer.
- Multiply an appliance’s kWh by your unit rate. For example, 2kWh at 26.32p per kWh is about 53p (2 × £0.2632).
- Measure real use rather than guessing. See how to measure appliance electricity use → and the best smart plugs with energy monitoring → .
- Try a worked example: how much a dehumidifier costs to run → .
Frequently asked questions
How much will my energy bills cost this year?
Ofgem’s typical figure for a dual-fuel household paying by Direct Debit is £1,723 a year at the 1 October to 31 December 2026 cap, up from £1,663. That is what a typical home would pay over twelve months if the rates stayed the same, not a forecast, because the cap changes every three months. Your own bill depends on how much energy you use, where you live and how you pay. As an illustration, 2,500kWh of electricity costs about £858 a year at the current average rate, including the standing charge. Use the price cap bill estimator with your own usage.Should I fix my energy tariff or stay on the price cap?
There is no answer that suits every household, and we cannot give personal financial advice. A fixed tariff holds your unit rate and standing charge for a set period, so Ofgem’s quarterly changes do not affect it, while a default tariff follows the cap and can move up or down. Compare the unit rate, standing charge, length, exit fees and your own usage, and check what happens when the deal ends. Ofgem says you could pay less by changing tariff or payment type, but that depends on current deals. See our fix or stay comparison and Ofgem’s guide to switching supplier.Is the Ofgem price cap going down?
Not overall. From 1 October 2026 the typical dual-fuel cap rose by 4%, mainly because of higher gas prices. Electricity is different: the government removed VAT from domestic electricity from 1 October 2026 to 31 March 2027, so electricity-only homes see a much smaller change. Ofgem says costs cannot be compared directly with earlier periods. The next announcement is on 25 November 2026.Does the price cap limit my total energy bill?
No. It limits the unit rate and standing charge suppliers can charge on default tariffs, not the total you pay. The more energy you use, the higher your bill will be.Am I covered by the Ofgem price cap?
You are covered if you are on a default (standard variable) tariff, whether you pay by Direct Debit, standard credit, prepayment meter or Economy 7. You are not covered by changes to the cap if you are on a fixed tariff, have a business energy contract, or get heat from a heat network or heating oil.When does the price cap change next?
Ofgem reviews the cap every three months. The next level, for 1 January to 31 March 2027, is due to be announced on 25 November 2026. After that, announcements are planned for 23 February 2027 and 26 May 2027. Ofgem may publish earlier if external events require it.Why is the rate on my bill different from the price cap figure?
Ofgem’s headline unit rate is an average for England, Scotland and Wales on a standard variable tariff paid by Direct Debit. Your rate can differ by region, payment method, meter type and tariff, and fixed or time-of-use tariffs can be quite different. Use the rates shown on your own bill or tariff information.Which rate should I use to work out what an appliance costs to run?
Use your electricity unit rate in pence per kWh, not the standing charge. The standing charge is a fixed daily cost that does not rise because one appliance runs for longer.Related guides
- Electricity unit rate vs standing charge →
- How much does a dehumidifier cost to run? →
- How to measure appliance electricity use →
- More UK energy guides →
Sources: Ofgem: changes to the energy price cap, 1 October to 31 December 2026; Ofgem: energy price cap and standing charges explained; Ofgem: energy price cap will rise by 4% from October 2026.
This guide is general information, not personalised energy, financial or legal advice. Rates and rules change, so check your own bill and Ofgem’s current figures. This page does not currently contain affiliate links, and we will say so clearly if that changes. See our affiliate disclosure.